ActGuide
Holiday debt: how to keep December from following you all year
Your holiday balance costs more than you think. The real cost of interest, the minimum-payment trap and a 90-day plan to get out of it.
In brief
Leaving $3,000 of holiday spending on a credit card at about 20% interest costs roughly $50 a month in interest. The minimum payment, which drops along with the balance, stretches repayment over years, while a fixed amount shortens it considerably. Take stock, stop adding to the balance, set a payment and automate it: in 90 days, the situation can look very different.
The gifts are unwrapped, the holiday feasts are over… and January’s credit card statement is on its way. For many households, debt after the holidays isn’t a disaster in itself. The problem is when that balance, meaning the amount you owe on the card, settles in and gets dragged along until summer, or even until the next holidays.
Here’s how to measure the real cost of a balance you carry over, avoid the minimum-payment trap and get back on track in 90 days.
The number to remember
Almost 9 years
to repay $3,000 of holiday spending by paying only the minimum on your credit card (example at 19.99%). Good news: you can go much faster.
What is the real cost of a balance that lingers?
According to Protégez-vous1, the going rate on a credit card is between 19% and 21%. At that level, an unpaid balance gets expensive fast.
Take an example: you finish the holidays with $3,000 on a card at 19.99%.
- Every month, that balance generates about $50 in interest ($3,000 × 19.99% ÷ 12 months).
- Over a full year, if you pay only the interest without reducing the debt itself, that’s about $600: the price of one more gift, paid to your bank.
And if some of the purchases were made on a store card, or if you took out cash with your credit card (a “cash advance”), the rate can be even higher.
Why is the minimum payment a trap?
In Quebec, the minimum payment on credit cards has been set at at least 5% of the balance since August 1, 20252. That’s better than before, but this minimum hides a trap. Let’s take the time to understand it, still with our $3,000 at 19.99%.
How is the minimum payment calculated? Every month, your bank calculates 5% of what you owe on the card. On $3,000, the first minimum payment is therefore $3,000 × 5% = $150.
Where does your payment go? It first pays the month’s interest. Only what’s left really reduces your debt. In the first month, of your $150, about $50 goes to interest and $100 repays the debt. Your balance therefore drops to about $2,900.
Where’s the trap? The following month, the bank recalculates the minimum on this new balance: $2,900 × 5% = $145. Then $140, then $135… The minimum asked for drops a little every month, and the share that really repays the debt melts away with it:
| If you pay only the minimum | Minimum payment | Of which interest | What repays the debt |
|---|---|---|---|
| Month 1 | $150 | $50 | $100 |
| Month 6 | $127 | $42 | $85 |
| Month 12 | $103 | $34 | $69 |
| Month 24 | $69 | $23 | $46 |
Result: it would take almost 9 years to repay everything, and you would pay about $1,440 in interest.
The solution: keep the same payment. Now imagine you keep paying $150 every month, exactly the amount of the very first minimum. You make no more effort than in the first month: you simply refuse to let the payment go down. Because interest shrinks as the balance does, a bigger and bigger share of your $150 repays the debt:
| If you keep $150 a month | Payment | Of which interest | What repays the debt |
|---|---|---|---|
| Month 1 | $150 | $50 | $100 |
| Month 6 | $150 | $41 | $109 |
| Month 12 | $150 | $30 | $120 |
| Month 24 | $150 | $4 | $146 |
Result: the debt is repaid in about 2 years, for about $680 in interest. With the same effort as the first month, you finish about 7 years sooner and save about $760 in interest. And if you can pay $300 a month, it’s settled in about a year, for about $310 in interest.
$3,000 card at 19.99%, no new purchases. Illustrative calculations.
View the data
| Balance after… | By paying the minimum | By keeping $150 a month |
|---|---|---|
| 6 months | $2,448 | $2,374 |
| 1 year | $1,997 | $1,683 |
| 2 years | $1,329 | $78 |
| 3 years | $885 | $0 |
| 5 years | $392 | $0 |
| 7 years | $172 | $0 |
The lesson is simple: choose a fixed amount and never lower it, even when the minimum asked for goes down.
Illustrative calculations: card at 19.99%, no new purchases on the card, amounts rounded to the nearest dollar.
A simple plan for the next 90 days
Your plan in 4 steps
- Week 1 · Take stock: Open your statements and write down each balance and its rate. No judgment, just numbers. If you have several debts, our next article will give you a complete method for taking stock.
- Weeks 2 to 4 · Stop the build-up: Put away the card that carries the balance, disable it in your payment apps and pay in cash or by debit in January. A balance won’t go down if you keep adding to it.
- Months 2 and 3 · Set a payment and automate it: Choose a realistic fixed amount, higher than the minimum, and schedule it right after your paycheque. Every dollar paid beyond the interest directly reduces the debt itself.
- Ongoing · Get ready for next December: Divide your holiday budget by 12 and set that amount aside every month. Next year, the gifts will already be paid for.
When does debt become too heavy?
Sometimes the holiday balance is added to other debts, such as a line of credit, a car loan or other cards, and your payments are only enough to cover the interest. That’s a signal not to ignore.
For some homeowners, bringing high-rate debts into the mortgage (that is, increasing the mortgage loan to repay your other debts and having just one payment, at a lower rate) can reduce monthly payments. But this solution has costs too: stretching out the repayment period can increase the total interest paid, and it only makes sense if the habits that created the debt change as well. Each situation has to be looked at case by case. To learn more, see our page on debt consolidation.
Free resources
Help exists, and it’s free. In Quebec, the ACEFs (associations coopératives d’économie familiale, or family economics cooperative associations) offer free, confidential budget consultations, with no income requirement. To find the one in your area, dial 211 or visit the 211 Quebec site (opens in a new tab).
Are you a homeowner and your debts are piling up? Book a free, no-obligation consultation with the ZenFi team: we’ll look at all the options with you, including those that don’t go through us. To prepare for the meeting, also see our tips before you come to see us.
Frequently asked questions
What is the minimum payment on a credit card in Quebec?
Since August 1, 2025, the minimum payment is at least 5% of the balance for all credit cards in Quebec. Paying only that minimum is still a slow and costly way to repay, though.
How much does a $3,000 credit card balance cost?
At 19.99%, a $3,000 balance generates about $50 in interest a month. By paying only the minimum, repayment could take more than eight years and cost more than $1,400 in interest (illustrative example).
Where can you find free help managing debt?
In Quebec, the ACEFs (family economics cooperative associations) offer free, confidential budget consultations. 211 can help you find the one in your area.
Sources
- Protégez-vous, “Taux des cartes de crédit” (opens in a new tab) (in French).
- Government of Quebec, “Le versement minimal fixé à 5 % du solde pour toutes les cartes de crédit” (opens in a new tab) (in French).
- Protégez-vous, “Carte de crédit : la hausse du paiement minimum peut faire mal” (opens in a new tab) (in French).
- 211 Quebec, “Better manage your personal finances thanks to the Associations coopératives d’économie familiale (ACEF)” (opens in a new tab).
This article is provided for information only and is not personalized financial advice. The rates mentioned are illustrative and may change without notice. Any financing solution is subject to credit approval.
This article is a translation of the French version, which is the reference text.
Groupe ZenFi (9498-0356 Québec inc.), a Quebec mortgage brokerage firm registered with the Autorité des marchés financiers (AMF), client number 3003043028.
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