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.
It’s a common misconception that making the minimum payment is a good thing, which is not the case, as making minimum payments over a long period of time results in the cardholder owing regular interest charges.
Most credit card companies calculate the minimum in one of these ways:
A fixed percentage of your balance (often 2%–3%)
A flat dollar amount (e.g., $10), if your balance is low
Any interest or fees owed, plus a small portion of the principal
Example:
If you owe $2,000 and your card requires 3% minimum, you’d owe $60 that month.
The more you pay beyond the minimum, the faster your balance drops — and the less interest you pay.
Example:
$2,000 balance at 20% interest
Q: What happens if I miss the minimum payment?
A: You’ll likely be charged a late fee, your interest rate could increase, and your credit score may drop.
Q: Can I pay more than the minimum anytime?
A: Yes — you can make multiple payments a month or pay any amount above the minimum.
Q: Do minimum payments affect my credit score?
A: Making at least the minimum helps your payment history, but carrying a balance can still hurt your credit utilization.
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.
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.
Learn More
