What To Do If You Can’t Afford Minimum Payments on a Credit Card?

The modern world revolves around the concept of credit. From buying a house, a vehicle, to managing everyday expenses, credit plays a crucial role. A staggering 79.3% of Canadians carry some form of outstanding debt. Among these, credit card debt is the second most common with 29% of Canadians having credit card debt. High-interest rates, often around 19-20%, make credit cards a costly form of borrowing. So, what happens when you can’t afford to make the minimum payments on your credit card?

The Implications of Missed Minimum Payments

Credit card balances can quickly spiral out of control, and even the minimum payments, typically 2-3% of your balance, can become a burden. On average, Canadians owe a whopping $23,800 across credit cards, personal loans, and lines of credit. If the balance on your credit card is $5,000, your monthly minimum payment would range between $100- $150.

What happens if you can’t meet this minimum payment? Let’s delve into the potential consequences.

Impact on Your Credit Score

Missing or making late payments can have a detrimental impact on your credit score. However, there’s a grace period; generally, late or missed payments take 30 days to appear on your credit report. If you make your payment within this period, card issuers may not report the late payment to the credit bureau.

Despite this, credit bureaus advise that you make your minimum payments on the due date each month, to avoid adverse effects on your credit score. A poor credit score can make it challenging to secure loan products in the future.

Slower Debt Repayment

The reality is that if you’re only making the minimum payment each month, you’re barely scratching the surface of your debt. Suppose you have a credit card balance of $2,000, an interest rate of 19%, and your minimum payment is 3%. If you pay only the minimum each month, it would take you over ten years to clear your balance.

During this time, you would also have accrued over $1,000 in interest. So, while it’s possible to gradually pay off your debt with minimum payments, it’s a slow and expensive process.

Escalating Interest Rates

Your credit card interest grows with your balance. Even if you’re making the minimum payment, you’re likely accruing more interest than you would by paying off a larger portion of your debt each month. Failing to make your minimum payments can compound this issue.

In Canada, credit card companies have the right to increase interest rates if borrowers don’t meet their minimum payment obligations. Moreover, if you have a credit card with a promotional interest rate, the credit card company may revoke this rate.

Tactics for When You Can’t Make Minimum Payments

If you’re finding it challenging to make your minimum payments, here are some strategies you can employ:

Negotiate With Your Creditor

Don’t be afraid to get on the phone with your credit card issuer and explain your situation. Ask if they can extend your due date or arrange a payment plan. Honesty is the best policy here. Most credit card companies would prefer to work with you than see you go bankrupt. Some financial institutions, like RBC and BMO, offer special accommodations for those affected by COVID-19.

Pay What You Can

Even if you can’t afford the full minimum payment, pay what you can. This shows your credit card company that you’re making an effort to repay your debt.


Creating a long-term budget can help you manage your finances and free up more money to put towards your credit card repayments. Check out Consolidated Credit Canada’s budgeting tips to get started.

Set Up Alerts and Reminders

Sometimes, the issue isn’t a lack of funds but forgetfulness. If you struggle to remember your payment dates, set up reminders on your phone or computer.

Avoid More Debt

While it may be tempting to use your credit card more or take on additional credit to meet your minimum payments, this will only exacerbate your situation. Focus on making your minimum payments and gradually increasing them to clear your debt faster.

Final Thoughts

Credit card debt is a global issue affecting millions. However, there’s always help available if you’re struggling to repay your debts. If you’ve tried everything and still need support, consider speaking to a credit counsellor. They can help you explore the various debt relief options available and find a solution that works for you.

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