Fees and borrowing costs
How the Credit Card Grace Period Works in Canada
Canadian credit cards must give at least 21 days without interest on new purchases when you pay the full balance. When the grace period applies, when it does not, and what carrying a balance costs.
What is the credit card grace period in Canada?
Federal rules require a minimum interest-free grace period of 21 days on new purchases, measured from the end of the statement period to the payment due date. It applies when you pay the full balance owing by the due date.
Your statement shows the due date. If you pay the full statement balance by then, the purchases on that statement cost no interest at all.
Put it into practiceCredit card interest explainedWhen does the grace period not apply?
It does not apply to cash advances, which usually charge interest from the day you take them, and it is lost on purchases if you pay less than the full statement balance.
Balance transfers and cash-like transactions (such as money orders or some gambling purchases) are usually treated as cash advances. Check your cardholder agreement for which transactions count.
What happens if I pay only part of the balance?
You are charged interest on the unpaid amount, and on most cards purchases on that statement lose their interest-free period. Paying most of the balance is much cheaper than paying the minimum, but only paying it all avoids interest completely.
For scale: $2,000 carried at 20.99% and paid off at $200 a month costs about $218 in interest over 12 months.
Which balance does my payment go to?
Any amount you pay above the minimum must go either to the balance with the highest interest rate first or be split proportionally across your balances, such as purchases and cash advances.
That rule helps when you carry both a cash advance and a purchase balance, but the simplest way to avoid interest is still to pay the full statement balance every month.
How can I make sure I never pay interest?
Set up an automatic payment for the full statement balance, not the minimum, from your chequing account. Keep enough in the account on the due date to cover it.
If you cannot pay in full this month, pay as much as you can and stop using the card until the balance is cleared. A lower-rate card or a balance transfer can cut the cost of a balance you already have.
Keep reading
Fees and borrowing costsStatement Balance vs Current Balance on a Credit Card in CanadaYour statement balance is what you owed when the statement was issued; your current balance includes everything since. Which one to pay to avoid interest, and how each affects your credit score.
Fees and borrowing costsBuy Now, Pay Later vs Credit Card in Canada: Which Costs Less?Affirm, Afterpay and other buy now, pay later plans at checkout compared with paying by credit card: what each costs on a $1,200 purchase, how pay-in-4 and monthly plans work, credit checks, and the risks.
Fees and borrowing costsHow Does Credit Card Interest Work in Canada?Understand APR, purchase grace periods and a monthly interest approximation before comparing card rewards.- DebtHow Credit Card Minimum Payments Work in CanadaWhy paying only the minimum takes decades: $5,000 at 20.99% takes 22 yrs 2 mo and $6,697 in interest at a 3% minimum, versus 2 yrs 1 mo at $250 a month.
Official sources and further reading
Terms vary by product. Confirm the provider’s current terms before acting. This guide does not predict approval, realized value or credit-score changes. How WalletReturn calculates value