Quebecers will have to pay more to cover the minimum monthly payments on their credit cards. On August 1, the rate will increase by half a percent to 3.5%. This amount will increase each year to reach 5% by 2025, as part of the measures adopted by the National Assembly in 2017 to prevent debt problems.
While it may seem counterintuitive to increase payment amounts to improve financial literacy, the change is intended to encourage people to pay off their credit card balance in full monthly to avoid additional charges and to help those who find it difficult to pay a higher minimum amount before falling into immense debt.
The Consumer Protection Office (OPC) Remarks that having trouble making the minimum payment on your credit card is a sign that you might need help from a consumer association which offers free and confidential services to people in financial difficulty.
The province has also introduced a online calculator this can determine how long it will take to pay off credit card debt if you only pay the minimum amount due each month.
A credit card with a balance of $1,000 (and a rate of 19.9%) will pay off in 10 years and 11 months if someone pays the minimum payment of 3% each month.
Additional charges total $979.87. Meanwhile, increasing the minimum monthly rate of pay by 3.5% means the same person would pay off their debt in 8 years and 11 months, with only $747.80 in additional fees. With a minimum payment of 5%, this would amount to 6 years and $441.87 in credit charges.
As of August 2019, all new credit card agreements must require minimum payments of at least 5% of a balance.
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