Payment methods and interest
How do I pay and how much interest will I be charged?
When you use a debit card, payments are usually charged to your account immediately.
With other cards there are various ways of paying:
- Immediate payment. The amount of the transaction (a payment at a store, cash withdrawing at an ATM, etc.), is charged immediately.This method is not often used as no credit is involved.
- Payment of the total amount spent during the month on the first day of the following month. You must have sufficient money in your account to cover the entire debt and normally no interest is charged.
- Paying by instalments, which may either be a percentage on the amount spent or a fixed amount, depending on your needs.
If you choose to pay small instalments, repaying the debt may take a long time, and if you use the card beyond a certain amount, instalments may not cover the interest generated, so that the debt will increase after each payment, instead of decreasing.
The card issuers will charge interest on the un paid balance. The interest rate must be indicated in the contract, together with:
- The over-limit rate. This rate is charged when the credit limit is exceeded.
- The late payment rate. This rate is charged when you stop paying as there is not enough money in your account. Late-payment rates are usually much higher than ordinary interest rates.
Find out more about interest rates related to cards in our 2016 Complaints Report (in Spanish)
Charge and credit card interest rates are usually fixed. However, card issuers institutions may include in the card contract the possibility of changing the rate, in which case you must be informed at least two months in advance of any change.
Charge and credit card interest rates are sometimes quoted monthly instead of annually. For instance, a monthly 1.5% nominal interest rate is the same as an annual nominal interest rate of 18% (1.5 x 12= 18).
When comparing various alternatives, you should check the APR (annual percentage rate) in each case.
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