Minimum Payment
The minimum payment is the smallest amount your credit card issuer requires you to pay by the due date each month to keep your account in good standing and avoid a late payment fee. While paying the minimum prevents a late fee and protects your credit score from a missed payment, it is not a debt repayment strategy — it is a debt maintenance strategy. The vast majority of your payment at the minimum goes toward interest, with very little reducing the principal balance.
For example, a $5,000 balance at 19.99% APR, paying only the minimum of approximately 2–3% per month, would take over 30 years to pay off and cost more than the original balance in interest charges.
Quick Facts
| Detail | Value |
|---|---|
| Typical Canadian minimum | 2% – 3% of balance, or $10 minimum |
| Penalty for missing minimum | Late fee (varies) + credit score damage |
| FCAC disclosure requirement | Issuers must show how long full payoff takes at minimum payments |
| $5,000 at 19.99% (min only) | 30+ years, thousands in interest |
| Best practice | Always pay the statement balance in full |
| Impact on grace period | Carrying any balance eliminates the grace period on new purchases |
Canadian Context
Canadian regulations require credit card issuers to disclose on every statement how long it will take to pay off your balance if you make only minimum payments, along with the total interest that would be paid. This is an FCAC-mandated transparency measure introduced to help Canadians understand the real cost of revolving debt. Some Canadian issuers set minimum payments as a fixed percentage of the balance (e.g., 2%), while others use a formula incorporating interest charges. Even paying slightly more than the minimum — for example, rounding up to a fixed amount each month — dramatically reduces payoff time and total interest paid. See our credit card basics guide for a full breakdown of how billing works.
Related Glossary Terms
Information on this page is provided for general educational purposes. Minimum payment formulas vary by issuer — always check your monthly statement for the exact amount required.