How much interest does credit card debt cost?

At 20% APR, $1,000 costs ~$200/year in interest if unpaid. A $5,000 balance costs $1,000/year. Minimum payments barely cover interest, so your balance barely decreases. This is why credit card debt is so dangerous.

Should I use a balance transfer card?

Balance transfer cards offer 0% APR for 6-12 months, saving significant interest. However, transfer fees (typically 1-3% of balance) apply. A $5,000 balance transfer costs $50-150 upfront but saves $833/year in interest — worth it if you can pay down the balance during the 0% period.

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Credit Card Payoff Calculator

See how long it takes to pay off your credit card balance and how much interest you'll pay. Compare minimum payments vs accelerated payoff strategies.

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See your payoff timeline

Compare minimum payments vs accelerated payoff and discover how much interest you'll save.

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Last Updated: February 2026

The Credit Card Interest Trap

The average Canadian credit card charges 19-21% APR. A $5,000 balance with 20% APR costs $83/month in interest alone. If you make minimum payments (2% of balance), it takes 38 months to pay off and costs $3,400 in interest — 68% more than the original debt.

Payoff Strategy: Pay More Than Minimum

Paying $200/month instead of $100 saves $2,000 in interest and cuts payoff time from 38 months to 28 months. The key is paying enough to reduce the principal faster than interest accumulates.

Interest Calculation Explained

Credit card interest compounds daily. Each day, your issuer calculates interest on the outstanding balance × daily rate (APR ÷ 365). This is why paying down balances quickly is critical — every dollar reduction stops daily interest accumulation.

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