Credit cards: minimum payment will increase in August

Credit cards: minimum payment will increase in August

Credit card holders will have to pay off more of their balance starting August 1. The minimum payment will indeed increase to 3.5% from this date.

Fixed at 3% since August 2021, this rate should increase by 0.5% per year to reach 5% in 2025. This is a measure provided for in the Consumer Protection Act adopted in 2017 in order to prevent debt problems.

These changes apply to credit cards whose contract was signed before 2019 since any contract for a new card issued since August 2019 must provide for a minimum payment which cannot be less than 5% of the balance.

This measure will allow citizens who only make the minimum payment to achieve substantial savings on credit charges. For example, a consumer with a balance of $1,000 on a card with a credit rate of 19.9% ​​would pay off his balance in 10 years and 11 months with a minimum payment of 3%, with fees loan of $979.87, while he would repay it in 8 years and 11 months and pay $747.80 with a minimum payment of 3.5%. The debt would therefore be repaid two years earlier and the consumer would save just over $230 in credit charges.

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