How Canadian credit card interest actually works
A credit card gives you a revolving line of credit. If you pay the full statement balance by the due date, you owe nothing extra, you got an interest-free loan. If you pay less than the full balance, interest kicks in on the entire balance from the transaction date, at typically 19.99% to 22.99% per year for most Canadian cards (and higher for retail store cards). Cash advances charge interest from day one, no grace period. The minimum payment is typically $10 or 3% of the balance, whichever is higher.
Carry a $5,000 balance on a 19.99% card and pay only the minimum. The minimum starts around $150 a month and shrinks as the balance shrinks. At that rate, full payoff takes roughly 30 years and you pay over $7,000 in interest, more than the original balance. Bump the payment to a flat $250 a month and you clear the balance in 25 months for about $1,200 of interest.
Treating the minimum due as a budgeted monthly bill. It is engineered to keep you in debt for decades. Pay the full statement balance every month. If you cannot, pay as much as possible and stop charging the card until the balance is gone.
A 60-second lesson on this, with a worked drill, lives inside the Finlo app. Free, forever, on the basics.