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Quebec credit card holders will face higher minimum payments starting on Thursday, when new provincial regulations designed to improve household finances come into effect.

The new law requires a monthly payment of at least 2 per cent on outstanding credit card balances as of Aug. 1, after which, annual increases will bring the minimum up to 5 per cent by 2025 for existing card holders.

Credit card providers, however, can choose to forgo gradual hikes and immediately move to a 5-per-cent minimum. Additionally, any new credit card contract must establish minimum payments of at least 5 per cent.

The changes are part of an effort to modernize the province’s Consumer Protection Act. Credit card companies themselves will also face new disclosure requirements, such as providing borrowers with an estimated amount of time it will take to pay off a balance owing through minimum payments.

Quebec’s Office de la protection du consommateur put up a website that calculates the cost of carrying credit card balances over long periods of time.

“Making the minimum payment on your credit card balance can be very expensive,” the site says. “You'll be reimbursing that debt for a long time. You'll pay a high cost in credit charges, including a lot of interest.”

A $1,000 balance on a credit card with a 19.9 per cent interest rate, for example, would take almost 26 years to pay off by making just the minimum payments of 2 per cent, and would cost more than $3,000 in credit payments.

At a 5-per-cent monthly payment, that same debt would take six years to pay off, and would rack up about $440 in credit costs, according to the province’s site.

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