The Bank of Canada raised its key rate on October 28. If you carry a line of credit, you're probably wondering one thing: does my payment go up?
Short answer: the interest does, and quickly. Whether your required payment does depends on how your LOC agreement is written.
Here's what happened, what it costs in real dollars, and how to re-check your cushion before payday.
What actually happened
The Bank of Canada raised its policy rate by a quarter of a percentage point to 2.50% on October 28, 2026, ending a seven-meeting hold. It was the first increase since July 2023.
The big banks followed the same day. RBC, TD, CIBC and BMO confirmed their prime rates will rise from 4.45% to 4.70%, effective Thursday, October 29, 2026. National Bank announced the same 25 basis point move.
Prime had sat at 4.45% for almost a year. Canadians with variable-rate debt had a long reprieve. That's over.
How fast does a LOC reprice?
Fast. A line of credit is typically the prime rate plus a set percentage, such as prime plus 3%, so when prime moves, your line's rate moves with it. The "plus" part is your margin. It was fixed when you were approved, and it doesn't change.
The interest on an unsecured line can change without advance notice when prime moves. For prime-linked borrowing, the cost shows up in days, not months.
So your margin stays put and your rate goes up a quarter point.
The math: a $12,000 line of credit
Say your LOC is priced at prime + 3.5%, and you're carrying $12,000.
Before the hike (prime 4.45%)
- Rate: 7.95%
- Interest per year: $12,000 × 0.0795 = $954
- Interest per month: about $79.50
After the hike (prime 4.70%)
- Rate: 8.20%
- Interest per year: $12,000 × 0.082 = $984
- Interest per month: about $82.00
The difference is about $30 a year, or $2.50 a month, assuming your balance doesn't change.
Bigger balances show it more. On a $50,000 balance at prime plus 0.50%, interest-only payments rise from about $206 to $217 a month. Same quarter point, just more dollars underneath it.
None of this is dramatic. But Governor Macklem has said more hikes could come if inflation persists. Another increase isn't guaranteed. The next scheduled decision is December 9, so it's worth knowing what a second quarter point would do to your own number.
So does the payment go up?
It depends on what your agreement says. Three common setups.
Interest-only payments
Many lines work this way, and the payment moves right along with the rate. In our example, your $79.50 becomes $82.00.
Percentage-of-balance minimums
Some lines set the minimum as a share of your balance, with interest covered inside it. Your required payment might not budge. What changes is the split: more of the payment goes to interest, less to the balance.
A fixed payment you set yourself
If you pay a flat amount every month, the number on your statement stays the same. The balance just comes down a little slower.
Your LOC agreement spells out how your rate and minimum are calculated. That's the document that settles it.
What about your cards?
If you're juggling a LOC and a couple of cards, they won't all react the same way.
Many credit cards charge a fixed rate that isn't linked to prime, though some cards do link their rates to it. Those are usually described as prime plus a set percentage.
Fixed-rate cards stay put. Prime-linked ones don't. Check which kind you're carrying before you assume either way.
Re-checking your pre-payday cushion
A $2.50 change won't sink anyone. The reason to look is something else.
Paycheque-to-paycheque cashflow runs on small gaps. A $40 cushion looks fine until three small things land at once: a bit more LOC interest, a card payment, a subscription that renewed.
A quick way to re-check:
- List what leaves your account before the next pay date. LOC payment, card minimums, rent, utilities, phone.
- Update your LOC number. Multiply your balance by your new rate, then divide by 12. That's your rough monthly interest.
- Check whether your payment is automatic. If it's pulled from chequing, the higher amount comes out without a reminder.
- Look at the gap. Your balance today, plus income still arriving, against everything on that list.
- Note the next rate date. December 9 is on the calendar. Another quarter point on that $12,000 adds roughly another $2.50 a month.
If the gap is still comfortable, you're done. If it's thinner than it was last week, you found out before a bill did.
Where Viktoria fits
This is easy to lose track of when you're managing a LOC and a few cards. The rate moves, the interest creeps up, and your balance looks about the same.
Viktoria is a manual cashflow app built for Canadians. You enter your LOC, your cards and your recurring income, and it shows what's coming before the next bill hits. When a rate changes, you update one number and talk to Viktoria about what it means for the weeks ahead.
It's pre-launch. You can sign up for early access at viktoria.app.