By virtue of new provisions of the Consumer Protection Act, adopted a year ago, Quebec now requires that the rate be reduced from 2% to 2.5% of the balance.
The new rules of the Office de la protection du consommateur provide for an increase in the minimum threshold of half a percentage point per year, until it reaches 5% after a period of six years.
If you pay 2.5% of the balance each month, the repayment rate halves and the credit charges also halve. So a little extra effort can mean a lot of money in our pockets.
The Office has put online a calculator that allows you to see the total cost of credit charges for a given balance on the credit card, as well as the time it will take to pay off the debt. By entering different percentages of the balance paid each month to pay off, the consumer can see how expensive it is to stick to just the minimum payment.
For example, for a balance of $ 1000 on a card with a credit rate of 19.9%, a consumer who would make a minimum payment set at 2% would pay off his debt in 25 years and 10 months, by paying fees. credit of $ 3,001.40.
But with a minimum payment rate of 2.5%, the credit charge stands at $ 1,443.99, meaning it will take a consumer 10 years less to get off debt – that’s 14 years and 7 months.
In November 2017, the National Assembly adopted a bill which aimed to review all the rules of the law on consumer protection in matters of credit to prevent over-indebtedness of the population. However, with the pandemic, spending on credit has soared, according to a survey.
COVID is only making things worse. It is still possible to fix the situation, but I believe that there are people who are going to be more and more in debt.
According to the advisor, some people will have to delay their retirement by 5 to 10 years because of the debt.
There are people who are no longer able to save and there are others who have had to withdraw RRSPs or investments that were planned for their retirement […] So with all these amounts that are currently being used, we will have to postpone retirement.
With information from Marie-Josée Paquette-Comeau