Credit cards in Spain may sometimes offer deferred repayment of the debt incurred, up to the credit limit, in the form of periodic instalments. These instalments may be either a percentage of the outstanding debt or a fixed monthly amount. You can normally change modify the instalments you pay, within the limits set by the card issuer.
One the feature of revolving or deferred payment cards is that the debt resulting from the credit is “rolled over” each month. Therefore although the debt decreases with each repayment, it also increases every time you use the card to make payments, ATM withdrawals, etc. and the accrued interest, fees and other expenses will also be added to the amount you owe.
As a result, if your monthly payment is small relative to the total debt, it will take a long time to repay the principal, which may result in you paying a lot of interest. As both the debt and the monthly instalments vary also makes it impossible to draw up an amortisation table (as when taking out a loan, for example).
Consequently, best banking practices require that lenders take particular care in these cases. In particular, they must comply with the following guidelines:
- Even though it is not possible to give an amortisation chart, the lender must provide detailed information of all the transactions performed –including reference data, amounts debited and value dates, interest rates, fees and other expenses applied – in order to show the outstanding debt as clearly as possible.
- In those cases where the principal is due to be repaid over a long period, the following information must be provided regularly (i.e. monthly or quarterly):
- The estimated repayment term, which is when you would finish paying back the total debt, assuming no further transactions and constant instalments.
- Example scenarios of the potential savings that increasing the amount you repay could represent, and
- The monthly instalment that would allow you to pay off the whole debt within a year.
- Moreover, when you ask for information about how much you’ve paid and how much you still owe, the bank must ensure it provides you with as much detail as possible.
- If you ask when you will finish repaying your debt, the bank must give you some way of knowing the estimated repayment term.
- If you ask how much money you still owe with a view to paying off your debt, the bank must take any outstanding instalments or payments into account.
- And finally, your bank must inform you specifically about the new instalments you would pay and the existing debt before it raises your credit limit so that you can decide whether or not to accept the new limit.
If you want to find out how to repay your credit cars debt by a certain date by changing your repayments, you may find this calculator (in Spanish, opens in a new window) useful.
Find out more in our 2020 Complaints Report (in Spanish)