The minimum payment trap: why paying only the minimum costs you in Canada

Paying only the minimum keeps your account in good standing, but it is one of the most expensive ways to carry a credit card balance in Canada. Because most of each early payment goes to interest, a balance can take years (sometimes decades) to clear, and you can pay more in interest than the original purchases cost. This guide shows the real numbers, explains how the minimum is calculated, and points to the disclosure your statement is legally required to print.

Nothing here is financial advice. Confirm the exact terms on your own cardholder agreement and statement before acting.

What "minimum payment" actually means

The minimum payment is the smallest amount you can pay each month to keep your account current and avoid a missed-payment flag. On most Canadian cards it is the greater of a small flat amount (often around $10) or a percentage of your balance (often around 3 percent), plus any interest, fees, and past-due amounts already owing. As of August 1, 2025, the minimum payment for Quebec residents is set at 5 percent of the balance.

The exact formula varies by issuer, so the only reliable figure is the one on your own statement and cardholder agreement. Paying the minimum stops late fees and protects your standing, but it does almost nothing to reduce what you owe.

Why the minimum is a trap

Two things work against you at the same time.

First, interest is charged daily on the balance you carry, so a large share of an early minimum payment is eaten by interest before any of it touches the principal. For how that daily calculation works, see our guide on how credit card interest works in Canada.

Second, when the minimum is a percentage of the balance, the dollar amount you pay shrinks as the balance drops. A smaller payment on a slowly shrinking balance means the payoff date keeps sliding further away. The FCAC warns that minimum-only payers risk paying far more interest over time and can damage their credit by carrying high balances.

There is a third, quieter cost. A balance that lingers keeps your credit utilization high, which is the share of your available limit you are using. High utilization can weigh on your credit score even when every payment is on time, so the minimum-only habit can quietly cap your borrowing options elsewhere. The FCAC also notes that minimum-only payers can lose the benefit of promotional offers and, in the worst case, see a rate increase, so the slow path is not a safe path.

A worked example: $3,000 at 20.99 percent

Assume a $3,000 balance on a card at a 20.99 percent annual purchase rate, with no new purchases added. We compare paying only a 3 percent minimum (a common structure, with a $10 floor) against fixed monthly payments. The figures below are illustrative estimates to show the pattern, not a quote for any specific card.

Repayment approach	Time to clear $3,000	Approx. total interest
Minimum only (3% of balance, $10 floor)	Roughly 20+ years	Several thousand dollars
Fixed $100 / month	About 3 years 4 months	~$1,000
Fixed $150 / month	About 2 years	~$600
Fixed $300 / month	About 11 months	~$300

The takeaway is consistent: the minimum-only path stretches a three-year-sized debt across decades and can roughly double or more what you repay, while a modest fixed payment collapses both the timeline and the interest. To run your own numbers with your real rate and balance, use the FCAC Credit Card Payment Calculator (linked in Sources), which compares minimum-only, minimum-plus-extra, and fixed-payment options under the assumption that no new charges are added.

Your statement legally has to warn you

You do not have to model this yourself, because federally regulated issuers are required to put the answer on your bill. Under Canada's Financial Consumer Protection Framework Regulations (the rules that replaced the older Cost of Borrowing regulations), section 61 requires a credit card statement of account to include an estimate, expressed in months and years, of how long it would take to pay the outstanding balance in full if you only ever made the minimum payment.

The regulation sets the assumptions behind that estimate: only the minimum payment is made on each due date, and the current annual interest rate on purchases continues to apply. So the next time you open a statement, look near the minimum payment box. That "if you make only the minimum payment" line is the trap, quantified by law.

How to get out (or stay out)

• Pay the full statement balance by the due date whenever you can. That keeps your interest-free grace period and means you pay zero interest on purchases.
• If you cannot pay in full, pay a fixed dollar amount well above the minimum and keep it constant. A fixed payment beats a shrinking percentage every time.
• Move expensive debt to a cheaper rate while you pay it down. A low-interest card or a promotional balance transfer can cut the interest drag; see our guide on balance transfer cards in Canada.
• Avoid adding new purchases to a balance you are trying to clear, since they restart the interest cycle.

If your goal is rewards, only chase points on a card you pay in full each month. A 20 percent interest charge erases any 1 to 5 percent in rewards many times over. Browse the full lineup on our cards page to compare rates and features.