New rules come into effect today regarding credit card payments in Quebec! Here is everything you need to know.
Your Minimum Payment will Increase
…but that’s actually a good thing for the economy! The average Canadian has $22,000 in credit card debt, and that’s really hurting our collective spending power.
Starting today, the minimum payment for credit cards in Quebec is increasing to 2% of the total balance. That percentage will increase by 0.5% each year until it reaches 5%. That means that Quebeckers will repay their credit cards more quickly and pay less compound interest.
New Rules will Save You Money
Paying 5% of your total balance each month means you’ll pay interest on credit card debts for a shorter amount of time. Quebec’s Office de la protection du consommateur gave the following example.
For a $1000 debt on a credit card with a 19.9% interest rate, paying just 2% of your balance each month would mean your debt will be paid in 25 years and 10 months; in that time, you’ll have paid $3001 in interest. That’s more interest than the initial loan! Yikes!
In contrast, with a 5% minimum payment, you’ll have repaid the debt in just 11 years, paying less than $1000 in interest. Sounds more reasonable, doesn’t it?
In the end, higher minimum payments on credit card debt are expected to put more money in consumers’ pockets, which is definitely good for the economy as it will increase Quebeckers’ collective spending power.
Other Canadian provinces are expected to watch closely as this policy evolves, and possibly implement similar measures.