1. What is Minimum Payment in Canada?

In Canada, the minimum payment is the smallest amount you must pay each month to keep your credit card account in good standing. By law, Canadian credit card issuers must set minimum payments that will pay off the balance within a reasonable timeframe.

2. How is Minimum Payment Calculated?

The standard calculation in Canada is:

Where:

• \( MP \) — Minimum payment (CAD)
• \( P \) — Principal balance (CAD)
• 3% — Percentage of balance
• $10 — Minimum floor amount

Explanation: You'll pay whichever is greater - 3% of your balance or $10. Some cards may use slightly different calculations (like $5 minimum or adding interest/fees).

3. Importance of Minimum Payment

Details: While paying the minimum keeps your account in good standing, it's the most expensive way to manage credit card debt. Making only minimum payments means you'll pay significantly more interest over time.

4. Using the Calculator

Tips: Enter your current credit card balance in CAD. The calculator will show your estimated minimum payment based on standard Canadian credit card terms.

5. Frequently Asked Questions (FAQ)

Q1: Is the minimum payment the same for all Canadian cards?
A: Most major cards use this formula, but some may have slightly different terms. Always check your cardholder agreement.

Q2: What happens if I pay less than the minimum?
A: You may be charged a late fee (typically $25-$50) and it could negatively impact your credit score.

Q3: How long would it take to pay off my balance making only minimum payments?
A: For a $1,000 balance at 19.99% interest, it would take about 8 years and cost $800+ in interest.

Q4: Does the minimum payment include interest charges?
A: No, interest is calculated separately and added to your next statement.

Q5: Are there better alternatives to minimum payments?
A: Yes, paying more than the minimum or paying your balance in full each month saves significant interest costs.