/ Finance 101

Small changes, big savings

How small changes to your payment schedule can help you save big on your credit card.

While 91% of Canadian adults have at least one credit card, only half of us pay off our balance each month.1 If you’re carrying a balance on your credit card and only making minimum payments, it can be easy to ignore how much your debt is costing you - but in the long-term, you might pay more than you bargained for.

The Government of Canada offers a free credit card payment calculator to show you how much money you can save on credit card debt by trying different payment options. All you need to know in order to get started is your credit card balance and interest rate. Visit the tool on the Financial Consumer Agency of Canada’s website and find out how small changes in your payment schedule could lead to big savings.2

Here’s how you can use the calculator to help you understand your payment options and start saving money:

Start with your minimum payment

Play around with the calculator by choosing several monthly payment options. How much did you pay on your credit card last month? Use that amount as a start. Enter this information as Option A.

For example, let’s say you owe $1,300 on a credit card that has an annual interest rate of 19.99%. Your minimum payment is probably close to 2% of the balance, or about $30.

Try some different payment options

If you’d rather pay more than your minimum payment and are looking to get out of debt, try adding different amounts on top of your minimum payment. Enter this information as Option B.

For example, perhaps you want to consider paying an additional $50 on your credit card every other week ($100 a month). That would bring your total monthly payment to $130 a month.

Use the credit card calculator as many times as you like, trying different payment options and amounts."

Consider paying a fixed amount each month

Fixed payments are great for budgeting, because you know exactly how much to set aside each month toward your debt. How much do you think you could pay every month until your credit card debt is paid off? Enter this information as Option C

For example, maybe you can set aside $75 each paycheque to go towards paying off your credit card. Every month you could pay a fixed amount of $150 on your credit card debt.

Calculate and learn your options

Once you’ve entered all your information into the calculator, hit “Calculate” and find out your options. Under the calculator a table will appear telling you how much time it will take to pay off your credit card based on the information you supplied.

In our example, the difference in savings is drastic

If we only make the minimum payment, it will take over six years to pay off the debt and will cost almost $1,000 in interest. In comparison, by making fixed payments each month toward the debt, it will take only 10 months to pay off the balance and only cost $100 in interest — a savings of five years and almost $900.

Use the credit card calculator as many times as you like, trying different payment options and amounts. You can also find useful saving strategies at the bottom of the page.

Sometimes making payments on multiple credit cards or bills can become overwhelming. If you’re having difficulty managing multiple bills or are looking for a simpler way to pay off debts, consider applying for a Fairstone bill or debt consolidation loan. Read our article about debt consolidation and find out how you can reduce your bills, restore your credit and relieve your stress.

Fairstone has been providing Canadians with loan solutions since 1923. We’re here when you need us.


This article is for informational purposes only. For personalized financial advice, you should contact a qualified financial advisor.

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