Paying off your credit card
Making your payments on time
You can choose to pay your balance in different ways such as:
- by telephone
- at an ATM
- in person at a branch
- by pre-authorized debit
- by mail with a cheque
The payment method you choose can affect how quickly the issuer processes it and the date they consider it paid. The time to process your payment will also vary depending on your financial institution. Make sure you know when your issuer will process your payment to avoid making a late payment.
Issuers process credit card payments during business days from Monday to Friday. If a payment is due on a weekend or holiday, you can make your payment the following business day. This will count as paying on time.
Contact your credit card issuer to find out how long it takes to process different payment methods.
Making at least the minimum payment
Make at least the minimum payment if you can’t pay off your balance. The minimum payment is the minimum amount you must pay each month on your credit card balance.
Your minimum payment will be:
- a flat dollar amount, usually $10, plus any interest and fees, or
- the higher of a dollar amount, typically $10, or a percentage of your outstanding balance, typically 3%
Your credit agreement will tell you which method your credit card issuer uses to calculate your minimum payment.
Paying only the minimum amount means:
- it takes you longer to pay off your balance
- you pay more interest
Increasing your monthly payment will shorten the time it will take you to pay off your balance. Even a small amount will shorten the time by a lot.
Since August 1, 2023, the credit card minimum payment for Quebec residents is 4%. The rate will increase by 0.5% until it reaches 5% in 2025.
|Payment scenarios||Starting balance||Payment amount||Interest rate||Time required to pay off balance||Interest paid||Total amount paid|
|Scenario 1: You pay only the minimum each month||$2,000||$60||18%||3 years, 11 months||$793||$2,793|
|Scenario 2: You pay the minimum plus $100 each month||$2,000||$160||18%||1 year, 2 months||$231||$2,231|
Your credit card issuer may be a federally regulated financial institution. In that case, your credit card statements must include the time required to pay off your balance by only paying the minimum amount.
Your credit card issuer may offer you a payment holiday. This means they'll let you skip a payment. You'll still pay interest.
Your credit card issuer may be a federally regulated financial institution. In this case, they must clearly tell you if you'll pay interest when you skip a payment. This information must come with the payment holiday offer.
For information on payment holidays, check the terms of your credit card agreement. You can also contact your credit card issuer. Ask questions about anything you don't understand.
How credit card issuers apply payments to your balance
If you don’t pay your credit card balance by the due date, you’ll pay interest.
Different interest rates may apply to different types of credit card transactions. For example, cash advances often have a higher interest rate than purchases. This means different interest rates will apply to your balance depending on how you use your credit card.
Typically, your minimum payment will apply to the portion of your balance with the lowest interest rate. Any amount you pay over the minimum payment applies in one of the following 2 ways:
- to the portion of the balance with the highest interest rate
- proportionally to the entire balance
Your credit card issuer may be a federally regulated financial institution. In this case, they can decide how they'll apply your minimum payment to your balance.
Check your credit card agreement or ask your credit card issuer how they apply payments to your balance.
Missing or making late payments
If you don’t pay at least the minimum payment or you make a late payment, you risk:
- your interest rate increasing
- negatively affecting your credit score
- losing the benefit of any promotional rate offer you have
- your financial institution cancelling your credit card
Filing a complaint about your credit card issuer
Federally regulated financial institutions must have a process to resolve disputes between consumers and their financial institutions.
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