Credit card interest calculator for Canada

This credit card interest calculator shows how long a Canadian credit card balance takes to pay off, how much interest it costs, and how that changes if you pay only the minimum, a fixed amount, or whatever it takes to clear the card by a date you choose. It uses the daily-interest method Canadian cards typically apply, and lets you type in your own card’s minimum payment rule instead of guessing it.

How do you use this credit card payment calculator?

1. Enter the balance owing. Use the balance from your latest statement or banking app. If you are still using the card, the result is a best case, because new purchases are not included.
2. Enter the annual interest rate. It is printed on your statement and in your cardholder agreement. Use the purchase rate for purchases; if part of the balance is a cash advance or balance transfer, that part may carry a different rate.
3. Choose how you plan to pay. “Only the minimum payment” follows your card’s minimum rule. “A fixed amount every month” uses one dollar figure until the balance is gone. “Pay it off within a set number of months” works out the level payment that clears the card in the number of months you pick.
4. Set your card’s minimum payment rule (under Your card’s minimum payment rule). Issuers write their own formulas, so copy yours from the statement: either a percentage of the balance, or the month’s interest plus a percentage, each with a dollar minimum.
5. Read the results. The summary gives the payoff time and total interest first. Below it, the comparison table runs the same balance through every payment approach, the statement-period table shows what one month of daily interest costs, and the schedule (downloadable as a CSV file) lists every payment.

How is credit card interest calculated in Canada?

Credit card interest in Canada is typically charged every day: the annual rate is divided by 365 to get a daily rate, that rate is applied to each day’s balance, and the total for the statement period is added to the account on the statement date. The Financial Consumer Agency of Canada’s guide to how credit cards work covers when interest applies and how grace periods work; your cardholder agreement sets out your card’s exact interest calculation.

Because interest is counted by the day, a longer statement period costs more than a shorter one on the same balance. Using the worked example below — a $5,000 balance at 19.99% — one statement period costs:

The daily rate in this example is 0.0548%. Over a year the difference between short and long months evens out, which is why the calculator uses the average month rather than a calendar.

Most cards also offer an interest-free grace period on new purchases when the full statement balance is paid by the due date. MBNA’s cardholder agreement, for example, gives at least 21 days interest-free on new purchases when you pay the full statement balance by the due date (cash advances and balance transfers get no grace period). Once a balance is carried past the due date, daily interest applies and the grace period on new purchases is usually lost until the card is paid in full again. Your agreement explains exactly when it returns.

Daily interest vs a monthly rate: which method does this calculator use?

The calculator uses simple daily interest, posted monthly: each day’s interest is the annual rate ÷ 365 times the balance, the month’s interest is added on the statement date, and the month is the average length of 365 ÷ 12 days. With a steady balance through the month, that makes the monthly rate exactly the annual rate ÷ 12.

Some cardholder agreements instead compound interest daily, adding each day’s interest to the balance straight away. That costs slightly more, because interest is charged on interest within the month. The calculator’s results show the gap for your numbers in the “What could change this result” list. For the worked example:

The gap between the two methods, about $102 over two decades of minimum payments in this example, is much smaller than the gap between payment strategies below.

How long does it take to pay off a credit card with minimum payments?

A minimum-only payoff usually takes many years, because a minimum set as a share of the balance shrinks as the balance shrinks. Here is a worked example with hypothetical numbers: a $5,000 balance at 19.99%, a minimum rule of 3% of the balance with a $10 floor, and no new purchases.

• First month’s interest: $83.29, giving a statement balance of $5,083.29.
• First minimum payment: $152.50, of which only $69.21 reduces the balance.
• Paying only the minimum, the card is paid off in 20 years and 4 months, with $5,773 of interest — $10,773 repaid on a $5,000 balance.

The same balance under every payment approach in the calculator’s comparison table:

The second row is the simplest change to make. Simply refusing to let the payment shrink — paying $152.50 every month instead of the falling minimum — turns a two-decade payoff into four years. Adding $50 to that, for $202.50 a month, clears the card in 2 years and 9 months with $1,495 of interest.

The rate matters too. At 14.99% — five points lower — the same minimum-only plan costs $3,360 in interest and ends in 16 years and 2 months. For cards with lower rates, see the comparison of low-interest credit cards in Canada; for moving a balance to a promotional rate, see balance transfer credit cards in Canada.

How is a credit card minimum payment calculated?

A credit card minimum payment is calculated with a formula each issuer sets in its cardholder agreement, so there is no single Canadian number. The two common shapes are a percentage of the statement balance with a dollar floor, and the month’s interest (and fees) plus a smaller percentage of the balance, also with a floor. When the balance is below the floor, the minimum is simply the full balance. The guide to how credit card minimum payments work goes through the wording to look for on a statement. Cardholders in Quebec can also check the Office de la protection du consommateur for the rules that apply there.

Small differences in the formula have large effects. The same $5,000 balance at 19.99%, under hypothetical minimum rules entered in the calculator:

Two things stand out. A higher dollar floor shortens the tail of the payoff sharply, because it stops the payment from shrinking to a trickle. And when the percentage barely exceeds the monthly interest rate — 2% against 1.666% a month here — the balance falls so slowly that it is still not gone after 50 years.

What interest rates do Canadian credit cards charge?

Canadian credit card rates are set by each issuer and printed in the account agreement and on every statement. For reference, these are published rates on a few cards reviewed on this site, with their sources:

Rates change, so enter the rate from your own statement. The Tangerine Money-Back Mastercard review and the MBNA Rewards World Elite review cover those cards’ other costs, such as fees and rewards.

How the maths works

In plain English, the calculator repeats the same four steps for every month until the balance is gone:

1. Interest for the month. Balance × annual rate ÷ 365 × (365 ÷ 12) — which simplifies to balance × annual rate ÷ 12 — rounded to the cent.
2. Statement balance. The balance plus that month’s interest.
3. Payment. Under the minimum strategy, your rule applied to the statement balance (never less than the dollar floor, never more than the balance). Under the fixed strategy, the same amount each month. Under the target strategy, the level payment from the standard loan-payment formula, balance × r ÷ (1 − (1 + r)^−n), where r is the monthly rate and n the number of months, rounded up to the cent. On a very small balance or a very long target, the smallest whole-cent payment that clears the card in time can clear it a little sooner, and the results say so.
4. New balance. The statement balance minus the payment.

If the payment is less than or equal to the month’s interest, the balance never goes down, and the calculator says so. If the balance is still not paid off after 50 years, it reports that too, instead of an endless schedule. The results also include a “Why this result looks like this” brief built from your own numbers — how much of the first payment goes to interest, what a rate five points lower would change, and what paying more each month would save.

The same annuity maths drives the site’s other borrowing tools. To see how interest works in your favour instead, the compound interest calculator guide runs the formula the other way. To plan several debts together — a card, a line of credit and a car loan, for example — the debt payoff calculator orders them by rate or by balance.

Common mistakes when paying down a credit card

• Treating the minimum as the plan. The minimum is the least the issuer accepts without calling the payment missed, not a repayment schedule. The comparison table shows how much the interest bill changes with even a modest fixed amount.
• Letting the payment shrink. As the balance falls, so does the minimum. Keeping the payment at the first month’s amount is one of the simplest ways to shorten the payoff.
• Adding new purchases while paying down a balance. On many cards, new charges attract interest from the day they are made once a balance is carried, because the grace period on new purchases no longer applies. The calculator assumes no new purchases; real results are only as good as that assumption.
• Using the purchase rate for a cash advance. Cash advances and balance transfers can carry a higher rate and no grace period. Model them at their own rate.
• Ignoring the end of a promotional rate. A low introductory rate on a balance transfer ends on a set date, and any balance left over reverts to the regular rate. Run the calculator at both rates.
• Missing a payment. A missed minimum can bring fees and, on some cards, a higher rate, and late payments can be reported to the credit bureaus. The guide to what a good credit score is in Canada explains why payment history weighs so heavily.

When should you talk to a professional about credit card debt?

Consider talking to a professional when the minimum payments across all your cards are hard to make each month, when the calculator shows a payoff that never ends or runs for decades, or when you are using one card or a cash advance to pay another. A non-profit credit counselling agency can review your budget and, where it fits, set up a debt management plan with your creditors. A Licensed Insolvency Trustee is the regulated professional for formal options such as a consumer proposal. Your bank or card issuer can also say whether a lower-rate product or a hardship arrangement is available. The Financial Consumer Agency of Canada’s page on paying off your credit card covers payment strategies and how to raise a problem with your card issuer.

This calculator is an educational estimate, not financial advice. It does not know your full finances, your card’s exact terms or any change coming to your rate, so check the results against your statement and your cardholder agreement before making decisions.