A credit card or a line of credit is credit extended to you in advance by an institution (often a bank or credit union). This credit is available for you to use whenever you need it, as you see fit. These are open credit contracts within the meaning of the Consumer Protection Act.

Terms of payment

At the end of each period, which is usually one month, the financial institution sends you a statement of account if you have used any or all of the credit made available to you.

You can choose to reimburse only part of your debt, but you must respect the minimum payment amount. Doing so, however, means having to pay credit charges than can be quite high.

When you only make the minimum payment every month, you are actually reimbursing a very small part of your debt.

Cash advances

If you take out a cash advance from your credit card, that is, withdraw an amount of cash from your credit card, credit charges start to accumulate right away. This means you will pay credit charges, even if you reimburse the entire debt on the scheduled due date.

What you are really paying

Your payments include the following amounts:

  • the net capital, namely the amount of credit you used; and
  • the credit charges, if you do not pay your debt in full before the payment due date.

Credit charges

Credit charges are all of the amounts you have to pay in addition to the amount of credit you used (net capital). They include interest, administration fees, insurance (other than for automobile insurance), rebates, commissions, etc. Check what amount your credit charges add up to. They are often expressed as an annual percentage: the credit rate. Membership or renewal fees may also be added to the credit charges.

Loans taken out from a credit card

A loan of money extended from a credit card is a form of financing offered by a merchant. It is the result of "buy now and pay later" types of promotions. Refer to the page on financing plans for more information on this subject.

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Last update : January 9, 2020

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The information contained on this page is presented in simple terms to make it easier to understand. It does not replace the texts of the laws and regulations.