The truth about minimum payments
Why do you owe so much on your credit card when you pay your bill every month?
The truth is that making the minimum payment on your credit card each month might seem convenient, but it can really cost you. Here’s an example:
Let’s say you buy a new computer that costs $1,000. If you only make the minimum payment of 2% each month and your interest rate is 18%, it will take you 151 months (over 12 years) to be rid of your debt, and in that time, you will have paid over $1,300 in interest.
That means you will have paid $2,300 in total—more than double the original price!
It’s important to read and understand your credit card agreement so you know how interest is calculated. Understanding your financial rights and responsibilities means no surprises.
Find out more at Canada.ca/it-pays-to-know.