Credit card interest is the cost of borrowing money when you don’t pay off your full balance by the due date. It’s typically expressed as an Annual Percentage Rate (APR) and can vary by card type, issuer, or transaction.
You’re only charged interest when you carry a balance from one month to the next. If you pay your full statement balance by the due date, you won’t owe any interest, thanks to the grace period.
But if you don’t pay the full amount:
Most credit cards use daily compounding interest. That means interest is calculated and added to your balance every day you carry a balance.
Here’s the math in action:
Even a few days of carrying a balance can add up quickly.
Purchase APR: Standard rate for regular spending.
Cash Advance APR: Higher rate (often 21–24%) with no grace period — interest starts immediately.
Balance Transfer APR: Can be lower, especially during promotional periods.
Penalty APR: A higher rate (sometimes 29.99%+) if you miss payments
Q: What’s a typical interest rate on Canadian credit cards?
A: Most charge between 19% and 22% APR for purchases. Cash advances and missed payments can trigger higher rates.
Q: Can I negotiate a lower interest rate?
A: Sometimes. If you have a strong history with your bank, they may offer a reduced APR — especially if you ask.
Q: Do all purchases have a grace period?
A: Only if your previous balance was paid in full. If you’re already carrying a balance, new purchases start accruing interest right away.
A minimum payment is the smallest amount you must pay on your credit card by the due date to keep your account in good standing. It prevents late fees and credit damage, but leaves interest charges on the rest of your balance.
Learn MoreKnowing how to use credit cards wisely can save you money, boost your financial health, and make the banks work for you, instead of the other way around.
Learn MoreA credit card is a financial tool that lets you borrow money from a lender (usually a bank) to make purchases up to a set limit, with interest charged if you don’t pay in full by the due date.
Learn MoreCredit utilization is the percentage of your available credit that you're currently using. It’s a key factor in your credit score, and one of the easiest things you can improve quickly in order to increase your credit score.
Learn MoreA credit score is a three-digit number that represents your creditworthiness, or how likely you are to repay borrowed money. In Canada, credit scores typically range from 300 to 900. The higher your score, the better your credit profile looks to lenders.
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