Do you know how you will have to repay the amounts you spend with your credit card?

14/04/2020

Social distancing and lockdown measures are leading to an increase in card payments, both for purchases in stores that remain open and for online purchases.

Not everyone is familiar with this method of payment and, therefore, you may not know the exact consequences of making payments with your card. In this post we explained what the different types of cards are, distinguishing basically between prepaid, debit and credit cards.

Credit cards normally have several repayment methods, each subject to different conditions. The most common ones are:

• Full payment at the end of the month: purchases will be charged to your account at the end of the card's settlement period, which tends to be monthly. Most often you will not be charged interest for the period between those purchases and the charge to your account.
• "Revolving" deferred payment: you will pay back the amount of your purchases by means of monthly instalments whose amount you will be able to establish, always within the limits set by your bank. It is worth noting that with each instalment paid, the amount of capital returned becomes part of the credit available. Calculate with our simulador when you would finish paying the debt depending on the credit you have drawn down, the amount of the instalments and the interest rate applicable.

Before using your card, check the repayment method you have set up. If you do not think it is the most appropriate one for you or if you do not understand the terms and conditions, do not hesitate to contact the issuing institution to find out whether your card allows you to change to other methods, when this change could be effective and whether you will be charged any fee.

It should also be noted that some institutions allow you to choose the repayment method that is best for you for each purchase. In this way, each time you use your card you can assess whether it is better to repay the amount at the end of the month or to defer repayment by paying in several instalments, depending on the applicable terms.

Sometimes, as in the case of some cards issued in conjunction with hypermarkets and other large stores, you will be asked which form of repayment you choose at the checkout itself or on the website of the store where you make the purchase. It is important to pay attention at this point, because the names used to refer to the repayment methods can differ from one institution to another: in some cases, they will ask you to choose between "up front" and "credit"; in others, instead of talking about deferred repayment, they will say "repayment by instalment", "flexible instalment", "easy instalment", "flat rate", etc. Do not hesitate to ask whether the repayment method to which they refer means that you will have to pay for the total purchase at a given time or if you will repay it in several instalments, and whether this deferral will involve the payment of interest and if so, how much.