Credit cards and debit cards are the most popular cards in Spain today. The former offer two services. The first is to pay, while the second is to get credit. This is when the card issuer advances money to you. Many people are not aware that banks charge a fee for these cards at the end of each year. The Organization of Consumers and Users (OCU), outlines everything you need to know so you don't get caught off guard.
A credit card will require you to pay two costs. There are the annual renewal and issuance costs and the deferred payment costs. The only way to get a credit card for free is to avoid paying annual renewal, issuance, or renewal fees.
Credit providers will generally offer you two payment options when you pay on credit. This is the OCU.
-Pay a fixed monthly amount
-Pay each month a portion of your outstanding debt.
Both cases will see interest on available credit charged on the monthly receipt. This is the amount you deferred.
Card issuers must inform customers more about the cost and operation of this credit type every three months, starting January 2021.
-The credit amount you have used.
- The interest rate that you are currently paying.
-The date you plan to pay the installments, if there are no credit provisions. This is if the card is not used from that point on.
If the amortization fee is lower than 25% of the credit limit granted they must indicate the savings that would be made by increasing the fee by 20% or 50%, 100% or 100% and the dates you would end paying each case.
According to the OCU, deferred payment options often have very high interest rates. The Supreme Court deemed the interest rate of 27.24% APR charged by a Wizink credit cards to be usury in March 2020. Since then, however, card issuers have reduced their interest rates to make them less abusive, they are still very high.
The OCU also warns clients about the consequences of borrowing beyond their means.
Your entity will cancel your card provisionally and demand the overdue fees plus interest on arrears plus the commission to claim debit positions.
-Payment is required to activate the card. You can use it as usual.
-If you don't pay, the entity may declare the entire amount due and payable. This includes the interest and commissions owed. It will also require any outstanding debt.
If you are unable to pay the amount, the entity may initiate a legal action to recover it. They could even seize your property.
You will also be included in a list of defaulters, and will no longer be eligible for new credit.