Quebec Residents Hit With Credit Card Minimum Payment Hike

Janet Doyle

Jul 23, 2019

Mandatory Minimum Credit Card Payments in Quebec Are Going Up! Could this also happen in other provinces?

Here’s what you need to know:

  • On August 1, 2019, Quebec residents will be required to pay  at least 2% of the balance owing on their credit cards.
  • Minimum payments are expected to increase from 2% to 5% over the next few years.
  • Banks and credit card issuers can choose to increase the minimum payments  5% effective August 1, 2019
  • For the average Quebec resident owing $18,617 in credit card debt, the additional amount could add up to $8,936.16 a year.

A woman came into our office in Gatineau, Quebec this week because she is unable to pay her credit card bills. Her bank sent her a letter confirming that minimum monthly payments would increase to 3% of the outstanding balance effective August 1, 2019. Our client’s minimum payment went from $258 to $808 a month, an increase of 313%!.  She couldn’t afford the increase based on her fixed retirement income.

Unfortunately, we expect to see many similar cases in the coming years. Previous reports show that Canadians are stretched too thin financially, and an increase in monthly bills will push them over the edge. 46% of Canadians are $200 away from not being able to pay their bills, according to a recent segment by Global News. Additionally, 31% do not make enough money to cover their monthly bills and debt payments. For anyone that is living paycheque to paycheque, the seemingly small increase in interest could cause big problems.

While a 4% monthly increase doesn’t sound like a lot, Global news reported the average Quebec resident has $18,617 of credit card debt. If the unsecured debt is tied up entirely in credit cards, increasing a minimum payment from 1% to 5% means the minimum payment amount could mean increase from $186.17 to $930.85. Over the course of the year, that’s $11,170.20 in credit card debt payments! If 45% of Canadians cannot afford a $200 per month increase, how will they be affected by this new law?

The new legislation is designed to force Quebec residents to reduce their debt load which is becoming an increasing concern for economic forecasters, and it’s yet to be seen if this new law will come into effect in other provinces. Since June 2017, we’ve seen the National Bank raise interest rates five times and we’re beginning to see the fallout. A survey of Quebec residents by the Canadian Payroll Association shows that Quebec consumers carry more credit card debt than the Canadian average, and that it’s the most difficult debt for them to pay down.

Most credit card companies set minimum payments low to encourage consumers to carry the balance so the credit card company can continue making profits from interest for years. With rising interest rates affecting mortgage payments and living costs increasing every year, credit cards can become a dangerous tool for making ends meet.

Making payments that are more than the minimum is recommended as it will accelerate your financial health, reducing the amount of interest paid and helping you become debt free faster. Now is the time to re-evaluate your budget and prepare for any rate increases by reducing expenses. If credit card payments are not affordable, you are unable to make payments on time, or creditors are calling, it’s time to speak with a professional to learn about your options for reducing debt. Contact our office for a free consultation: info@doylesalewski.ca or 1.800.517.9926

The client that came to see us found immediate relief from her debt through a consumer proposal; if you’re interested in finding out what alternatives are available to you or want advice on how to manage your increased credit card payments contact Doyle Salewski: 819-776-7777 or infog@doylesalewski.ca