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Minimum Credit Card Payments on the Rise in Quebec

Aug. 1, 2019
3 mins
A man types his credit card info into his phone while his cute dog sits beside him

New credit card rules take effect in Quebec today. The new guidelines will aim at reducing consumer debt quicker and lowering the amount paid in credit charges.

A CBC report stated that the average Canadian, excluding their mortgage, is carrying $22,000 worth of debt related to credit cards, lines of credit, and loans.

What Are the New Credit Card Guidelines?

In an effort to reduce the credit charges paid by consumers, the minimum monthly payment required for a credit card can be no less than 2%. This means that current contracts would increase to a minimum payment of 2%, and contracts that already state a 2% minimum payment would stay the same, for now.

The minimum threshold will gradually increase by half a percentage point per year beginning August 1, 2020, until it reaches the target of 5%.

Other improvements to the rules include better information for consumers before entering a credit agreement and additional protections for consumers who are indebted.

It is likely these protections will be implemented across Canada as other provinces follow Quebec’s lead.

How Will This Help the Average Consumer?

If, for example, you had a credit card with a balance of $1,000, with a credit rate of 19.9%, your minimum payment of 2% would take you 25 years and 10 months to repay. Over this period, you would incur credit charges of $3,001.40.

Increasing the minimum payment to 5% would reduce the time needed to repay your debt to 6 years, and the credit charges would be significantly less at $441.87.

The goal of l’Office de la protection du consommateur, is to inform consumers of the savings that can be achieved by repaying more than just the accumulated interest. The Office has created an interactive tool to calculate a given credit card balance, the total cost of credit charges, and the amount of time it would take to pay off the debt. The intent is to make people more conscious of their spending habits, and the excess charges associated with using credit.

Responsible Spending

Paying more than the minimum payment on your monthly bill is a great start to tackling your finances. Setting a reasonable credit limit, paying your credit card on-time, and avoiding withdrawing cash from your credit card, can also help you manage your debt. If you can, try and pay your credit card in full. You won’t accumulate interest on your purchases, and you can avoid falling behind on credit card payments.

Finding Your Rate

Understanding how your credit card works can lead to more responsible spending. Rates.ca can help you compare credit cards and find the best credit card interest rate.

Hayley Vesh

Hayley Vesh is an editor and writer in the personal finance space, where she uses her eight years of media and marketing experience to bring content to life. She specializes in money products, including mortgages, home and auto insurance, and credit cards. Hayley holds a Broadcast Journalism diploma from Sheridan College and was awarded the Shaw Media Journalism and Media Award for graduating at the top of her class. Her work has appeared in Global News and diverse digital corporate training materials behind the scenes.

Hayley is passionate about making complex subjects, such as home buying and financial literacy, concise and intriguing. Her work has garnered media coverage from The Globe and Mail, blogTO, Yahoo! News, and CityNews 680 and has been syndicated across other publications.

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