For this week’s No More Ls column, we’re looking at junk fees in Canada. 

By Carli Whitwell

Did you know that 89% of adult Canadians have credit cards, using them for purchases big and small? It’s easier than ever to add to cart and to tap, tap, tap —especially with the cost of living on the rise. So easy, in fact, Canadians carry an average credit card balance of $4,652.

Less commonly understood is what happens when you don’t pay your monthly minimum amount. Skipping payments can hurt your current and future finances, not to mention cause the emotional stress of a due balance hanging over your head, or worse yet, getting calls from collections. We asked Canadian credit experts to break down the real costs of not paying your minimum credit card amount.

The financial cost of not making a minimum payment

When you’re putting your groceries or a pair of new sneakers on your credit card, you’re essentially borrowing money to pay for them. Minimum payments are the lowest amount you’re required to pay monthly to ensure you’re in good standing with your lender, a.k.a. the banks or fintechs behind your Mastercards or Visas. These payment amounts differ per credit card and can be a flat rate or a percentage of your balance. You’ll find that outlined in your credit card terms.

If you don’t pay your credit card off in full each month, that’s when compound interest comes into play. It’s calculated daily on your principal—any charges you’ve put on your card, like those aforementioned shoes and groceries—plus interest. Yes, you will pay interest on top of interest! 

Say you have a round-number balance of $5,000, with a 30% APR (annual percentage rate, which is the yearly interest rate). And say the minimum payment is 3%, so $150. If you let that minimum required payment ride for a month, you’ll end up paying an additional $125 in interest. Over three months, that’s $375, by six months, $750, and a year later it’s $1,500.

That doesn’t even account for any new purchases you’ve likely put on your card along the way.

When all is said and done, “you’re probably paying 30% to 40% more than what you actually borrowed,” says Jay Baykara, CEO of KSI Law in Markham, Ont., a firm which focuses on creditors, debt recovery and commercial litigation.

The future cost: The ripple effect of bad credit

Credit cards will typically come with a grace period of 90 days of not paying the minimum amount before considering the card account delinquent, according to Julie Kuzmic, head of consumer advocacy and compliance at Equifax Canada Co. After that? “It’s at the discretion of the lender whether it ends up with a collections agency,” she says. Collections agencies are hired by credit card companies to recover debt from customers. If and when they are called in, it will show up on your credit report and affect your credit score.

Remember, credit scores are three digit numbers that reveal your credit risk to potential future lenders. They consider variables like your payment history, your current balance versus your credit limit (known as utilization) and other aspects of your credit history. For Equifax, a score from 660 to 724 is considered good; 725 to 759 is very good; and 760 and up is excellent. These numbers don’t take into account your salary, investments or rent history, so even if you’re making six figures, your credit score won’t change without good credit habits, like paying off your minimum on time.

One a missed payment on your credit report, and it remains there for six—yes, S-I-X!—years. It can also reduce your credit score, which can in turn have various effects on  your finances, such as:

• Higher interest rates on credit cards and other loans: Because you’re seen as a high risk to not pay back your loan on time, you will likely pay more in interest. Say you need a loan to buy a car and you have a poor to fair credit score, you might be offered an annual percentage rate (APR) of 34.99% (35% is the legal limit in Canada for most loans). Over three years, you would pay $12,566 in interest. Someone with a higher credit score would get a lower interest rate, and save almost $10,000 over the course of three years.
• Higher insurance rates: In all provinces (outside of Ontario and Newfoundland and Labrador), insurers can determine your premium based on your credit score in the same way they would look at your age, gender and car model.
• Difficulty renting or buying a home: “Landlords are allowed to access credit history with the consent of the consumer when they're applying for a new unit,” says Kuzmic. As for a mortgage, the major banks likely won’t issue one if your credit score falls below 680.
• Trouble finding new employment: Some businesses run a credit check as part of a routine background check to verify trustworthiness.

The emotional cost: The mental toll and how to move forward

Less talked about but equally as important is how late payments can affect your mental health. According to FP Canada’s 2025 Financial Stress Index, 42% of Canadians say money is our top source of stress—with 88% acknowledging that taking action, including paying down debt, could help reduce stress. To help feelings of unease and shame, remind yourself that “credit scores are not moral judgments,” says Kuzmic. 

Miss a payment? What do you do?

Try to face the debt head on. If you miss a minimum payment or three or five, hop on the phone with your credit card company immediately for damage control. “They will usually give you the leeway you need, if you are upfront and communicate,” says Baykara. “It is in a lender’s best interest to keep you as a client. There’s a large window before it gets into really negative collections. They will work with you. They might lower your credit card minimum or put you on a payment plan.”

To avoid missing future payments, schedule minimum automatic payments to be paid three to four days in advance of your statement due date. And if you can make it a pay day even better, so you know the funds are in the account. The minimum payment due date is important, though, as it’s typically when your credit information is shared with credit bureaus. So, even if you can’t pay the bill in full for a month, make sure you still pay that minimum amount.)  

The minimum payment isn’t just some random number at the bottom of your credit card statement. It’s an important bill, and “the secret to good credit is not sexy: It’s to pay your bills on time,” says Kuzmic.

Carli Whitwell is an award-winning Toronto-based lifestyle journalist. She’s written for EE72, Refinery29, ELLE Canada, The Toronto Star and others. Her hobbies include going out for dinner and sleeping in.

Read more from this issue of The Get:

1. MVP: Husein Rahemtulla on working for himself at 25
2. How much should 20-something Canadians have saved?
3. Santa’s shortlist: The buzziest toys in Canada this year
4. True or False: I need a university degree to become wealthy

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