Fifteen-plus years of BC mortgage experience, distilled into practical writing on buying, renewing, refinancing, and building wealth through real estate.
One in four Canadians now plans to pay credit card minimums indefinitely
Emily Barnes keeps a notebook with three columns: rent, groceries, insurance. What's left after those three lines get filled in, about $340 a month, goes to the minimum payment on her Mastercard. The balance is $6,200. It was $5,800 last November. She's been making the minimum for seven months, which at 21.99% means she's paid roughly $900 in interest and reduced the principal by $100.
She is not alone in this. According to an Equifax Canada survey released in early August 2026, 25% of Canadian consumers expect to make only minimum payments on their credit cards in the coming months. That's not a spike driven by job loss or a sudden economic shock. It's the cumulative result of years of inflation in non-negotiable categories, rent, car insurance, groceries, combined with interest rates that are only beginning to ease from their 2023 and 2024 peaks.
The math behind the trap
A $5,000 balance at 20% interest, paid at the minimum (typically 3% of the balance or $10, whichever is higher), takes more than 20 years to clear and costs roughly $10,000 in total payments. That is not speculative. It's the contractual compounding structure of Canadian consumer credit.
Most people know this in theory. What they don't know is how quickly the trap closes once you enter it. The minimum payment drops as the balance drops, which means the pace of repayment slows over time rather than accelerating. In the first year of minimum payments on that $5,000 balance, you might reduce the principal by $600. In year five, you reduce it by $300. The interest component stays high because the balance stays high.
The 25% figure from Equifax represents roughly 7 million adult Canadians. If each carries an average balance of $4,000, that's $28 billion in revolving debt on which interest is compounding at rates between 19.99% and 25.99%. The cost to service that debt, even at minimums, is over $5 billion annually. That's $5 billion not going into RRSPs, not reducing mortgage principal, not building liquidity for the next emergency.
Why this became the baseline
The shift from "minimum payments are an emergency measure" to "minimum payments are the plan" didn't happen overnight. It happened in three stages.
First, the pandemic savings cushion evaporated. The households that entered 2023 with extra cash on hand burned through it by mid-2024. Second, the traditional escape valve, home equity lines of credit, closed for many Canadians as home values cooled and lenders tightened access. HELOCs, which had long been used to consolidate high-interest credit card debt into lower-rate secured borrowing, became harder to tap. Outstanding HELOC balances in Canada hit $357 billion as of April 2026, but new originations slowed.
Third, and most structurally, rent and insurance costs rose faster than wages. Rent increases in major metros significantly outpaced income growth from 2022 through 2025, with CMHC reporting rent growth of 8% in 2023 while wages grew by less than 4% annually during the same period. When the fixed costs eat a larger share of take-home pay, the discretionary cushion that used to absorb a credit card balance disappears.
What happens next
Credit utilization, the percentage of your limit that you're using, is one of the two largest factors in credit score calculation. A consumer who is using 80% of their available credit and making only minimum payments will see their score drop, even if they never miss a payment. That score drop makes refinancing the debt at a lower rate harder, which locks them into the high-rate trap.
The broader risk is systemic. If one in four Canadians is already at minimum-payment status during a period of relatively stable employment, even a small uptick in unemployment could push a significant share into delinquency. Serious delinquency is defined as 90+ days past due. It is the stage after minimum payments stop working.
Emily's notebook now has a fourth column. It's labelled "extra," and it's empty most months. She's considering a second job, not to get ahead, but to add $50 to the payment.
Emily Barnes keeps a notebook with three columns: rent, groceries, insurance. What's left after those three lines get filled in, about $340 a month, goes to the minimum payment on her Mastercard. The balance is $6,200. It was $5,800 last November. She's been making the minimum for seven months, which at 21.99% means she's paid roughly $900 in interest and reduced the principal by $100.
She is not alone in this. According to an Equifax Canada survey released in early August 2026, 25% of Canadian consumers expect to make only minimum payments on their credit cards in the coming months. That's not a spike driven by job loss or a sudden economic shock. It's the cumulative result of years of inflation in non-negotiable categories, rent, car insurance, groceries, combined with interest rates that are only beginning to ease from their 2023 and 2024 peaks.
The math behind the trap
A $5,000 balance at 20% interest, paid at the minimum (typically 3% of the balance or $10, whichever is higher), takes more than 20 years to clear and costs roughly $10,000 in total payments. That is not speculative. It's the contractual compounding structure of Canadian consumer credit.
Most people know this in theory. What they don't know is how quickly the trap closes once you enter it. The minimum payment drops as the balance drops, which means the pace of repayment slows over time rather than accelerating. In the first year of minimum payments on that $5,000 balance, you might reduce the principal by $600. In year five, you reduce it by $300. The interest component stays high because the balance stays high.
The 25% figure from Equifax represents roughly 7 million adult Canadians. If each carries an average balance of $4,000, that's $28 billion in revolving debt on which interest is compounding at rates between 19.99% and 25.99%. The cost to service that debt, even at minimums, is over $5 billion annually. That's $5 billion not going into RRSPs, not reducing mortgage principal, not building liquidity for the next emergency.
Why this became the baseline
The shift from "minimum payments are an emergency measure" to "minimum payments are the plan" didn't happen overnight. It happened in three stages.
First, the pandemic savings cushion evaporated. The households that entered 2023 with extra cash on hand burned through it by mid-2024. Second, the traditional escape valve, home equity lines of credit, closed for many Canadians as home values cooled and lenders tightened access. HELOCs, which had long been used to consolidate high-interest credit card debt into lower-rate secured borrowing, became harder to tap. Outstanding HELOC balances in Canada hit $357 billion as of April 2026, but new originations slowed.
Third, and most structurally, rent and insurance costs rose faster than wages. Rent increases in major metros significantly outpaced income growth from 2022 through 2025, with CMHC reporting rent growth of 8% in 2023 while wages grew by less than 4% annually during the same period. When the fixed costs eat a larger share of take-home pay, the discretionary cushion that used to absorb a credit card balance disappears.
What happens next
Credit utilization, the percentage of your limit that you're using, is one of the two largest factors in credit score calculation. A consumer who is using 80% of their available credit and making only minimum payments will see their score drop, even if they never miss a payment. That score drop makes refinancing the debt at a lower rate harder, which locks them into the high-rate trap.
The broader risk is systemic. If one in four Canadians is already at minimum-payment status during a period of relatively stable employment, even a small uptick in unemployment could push a significant share into delinquency. Serious delinquency is defined as 90+ days past due. It is the stage after minimum payments stop working.
Emily's notebook now has a fourth column. It's labelled "extra," and it's empty most months. She's considering a second job, not to get ahead, but to add $50 to the payment.
Sources
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