This guide explains the rule from the banks’ own cardholder documents and works through a dated example so you can see the cost to the cent.

The short answer

At many Canadian card issuers, the interest-free grace period only works if you pay the full statement balance by the due date. Pay even a few dollars less and interest is charged on every purchase on that statement, back to the day you made it. RBC and BMO both say this in their cardholder documents.

In our hypothetical example, someone with $2,000 of October purchases at 20.99% who pays $1,980 on the due date is charged $42.73 in interest. Interest on just the $20 they left unpaid would have been $0.12.

How the interest-free grace period works

The grace period is the time between your statement date and your payment due date. RBC defines it as “the number of days you have to pay your New Balance in full on or before the Payment Due Date for that statement.” If you do that, you pay no interest on the new purchases on that statement.

The length depends on your card. RBC and Scotiabank both say new purchases have a minimum 21-day interest-free grace period. The Financial Consumer Agency of Canada (FCAC) sample information box for a credit card agreement uses the same wording: “at least 21 days if you pay off your balance in full by the due date.”

The federal Financial Consumer Protection Framework Regulations require banks to disclose the grace period in days, and the circumstances in which it applies, on the application form and in the agreement. Each monthly statement must also show the amount you have to pay by the due date to keep the grace period. That number is the one to watch.

What happens if you pay less than the full balance

The interest is not limited to the amount you did not pay. RBC’s credit card disclosure says that if it does not receive payment in full of your New Balance by the due date, “you must pay interest on each new Purchase retroactively from the Transaction date until we process your payment in full.”

BMO’s cardholder agreement says the same thing in fewer words: “We will charge interest retroactively from the date of the purchase.” BMO also adds unpaid interest to your balance at the end of the statement period, so it can earn interest too. RBC says it does not charge interest on interest.

So a partial payment does two things. It reduces the balance going forward, but it does not save the grace period. The bank looks back and charges interest on each purchase for every day from the purchase until your payment arrived.

A worked example: $2,000 of purchases, paid $100 short

Say your statement period runs October 1 to 31, 2026, and you make five purchases totalling $2,000. Your card charges 20.99%, one of the purchase rates in RBC’s own interest table. The payment due date is November 21, which is 21 days after the statement date. You pay $1,900 on November 21 and make no new purchases in November.

Hypothetical example at 20.99%, daily rate 0.0575%. Interest runs from the purchase date to the day before the payment. Rows do not add exactly because of rounding.

Of the $43.19, only $0.58 is interest on the $100 you actually left unpaid. The other $42.61 is interest on purchases you paid off, charged for the days before your payment arrived. You would have paid nothing at all with one more $100 on the due date.

How much each payment amount costs

The table below uses the same five purchases and changes only the amount paid on November 21. The last column shows what you might expect to pay if interest only applied to the unpaid part.

Hypothetical example at 20.99% on $2,000 of October 2026 purchases. The $40 minimum uses 2% of the balance, the formula in the FCAC sample information box. Your card’s minimum may differ.

Most of the cost comes from losing the grace period. The balance you carry adds comparatively little. Paying $1,980 instead of $1,000 only saves $5.63 in interest in this example. Paying the last $20 saves $42.73.

How we checked the maths

We calculated the interest two ways in Python: once purchase by purchase, and once by adding up the balance for each day and multiplying by the daily rate. Both gave the same results. We also reproduced a figure from RBC’s own interest table, which shows $17.25 of monthly interest on a $1,000 average daily balance at 20.99% over a 30-day statement period.

The second surprise: interest after you pay in full

Say you get the November 30 statement, see the $100 balance plus $43.19 of interest, and pay it all on the next due date, December 21. You may still see one more interest charge on the December statement.

That is because the $100 you carried kept earning interest from December 1 until your payment was processed. In our example that is about $1.15 at a bank that does not charge interest on interest, as RBC says it does not. Where unpaid interest is added to the balance, as in BMO’s agreement, the same 20 days would cost about $1.65.

This trailing charge is small, but it confuses people because it appears after they think they are done. Pay it in full by its due date and you are back to normal: new purchases get the grace period again.

What never gets a grace period

Some transactions start charging interest on day one, no matter how much you pay. Scotiabank says the grace period applies to purchases and certain fees, not to:

• Cash advances
• Balance transfers
• Cash-like transactions
• Credit card cheques

RBC’s disclosure also says cash advances never get the grace period. How your payment is split between rate types matters too. BMO’s agreement says that outside Quebec, the part of your payment above the minimum is spread across rate categories in proportion to each balance, so a cash advance is not always paid off first. In Quebec, BMO applies payments to the highest-rate balance first.

How to get back to zero interest

1. Find the right amount. Check your latest statement for the amount needed by the due date to keep the grace period. Ask your issuer if it is unclear.
2. Pay that amount in full. This covers the carried balance and the interest already charged.
3. Expect one small trailing charge. Interest on the carried balance runs until your payment is processed, so it may show on the next statement.
4. Pay that trailing charge in full too. After that, new purchases should be interest-free again if you keep paying in full.
5. Automate the full amount if you can. If you set up automatic payments, choose the full statement balance rather than the minimum, so you never pay a little short.

If you have a balance you cannot clear in one month, compare the numbers in our guide on whether a balance transfer is worth it. If you missed the due date entirely, see what happens when you miss a credit card payment.

Frequently asked questions

• Sources, checked October 27, 2026: RBC Royal Bank credit card disclosure (Form 17925, 11/2025), grace period, retroactive interest, interest table; BMO cardholder agreement (04/25), sections 1, 14, 15 and 16; Scotiabank: What is a grace period?; RBC: What is a credit card purchase rate; FCAC: Credit agreement for a credit card, sample information box (modified 2025-10-07); Financial Consumer Protection Framework Regulations (SOR/2021-181), current to 2026-09-30, sections 59, 60 and 66.
• Method: Hypothetical purchases and dates. Interest = amount x 20.99% / 365 x days, counted from the purchase date to the day before the payment. Results were checked with a separate daily-balance calculation and against RBC’s published $17.25 example.

Important: This guide is general information, not financial or legal advice. Interest rules differ by card issuer, so read your own cardholder agreement and statement. Gizly is not paid by any bank mentioned here. See our affiliate disclosure.