Many banks advertise free credit card offers. But consumers should take a closer look here. Because in the small print, fees are often hidden behind supposedly free offers. An absolutely free credit card does not require an annual fee. In addition, the cardholder does not have to pay fees when withdrawing money or paying at home or abroad. These completely free credit cards are becoming increasingly rare, because the banks are turning the fee screw due to the ongoing low interest rate phase.
Tip: In order to filter out the free offers, a credit card comparison on the Internet is worthwhile. Here consumers can quickly and easily compare the conditions of the providers.
Consumers should pay attention to the following fees:
- Annual credit card fee
- Cash fees when withdrawing from ATMs (at home and abroad)
- Foreign currency fees for withdrawing and paying foreign currencies
- Fees for a second / partner card
Where and how can I use my credit card?
Credit cards are a popular means of payment worldwide and are used both for paying in shops, restaurants and the like, as well as for withdrawing cash from ATMs. In addition, the credit card is often used when shopping online, as most retailers offer this payment method. Many cardholders even prefer to pay by credit card because the bill is paid immediately. The money is only debited from the checking account at the end of the month – together with all credit card payments of the month. So the customer stays liquid throughout the month.
The main types of credit cards
There are not only many credit card providers, but also many card types and billing models. The main ones are:
- Charge credit card: This type of credit card is used most frequently in Germany and includes a time-limited, interest-free loan. The sales made within a month are added together and debited from the customer’s account by direct debit after 30 days.
- Revolving credit card: With this type of credit card, the customer can pay the invoice amount in full or agree to repayment in installments, for which high interest rates are estimated.
- Debit credit card: With this credit card, the account is immediately debited with the invoice amount, similar to a Girocard. Cashless payment is still possible worldwide with the card.
- Prepaid credit card: This is a credit card on a credit basis. The credit line can be determined by the cardholder himself and recharged by bank transfer or at the ATM.
Additional services: reasonable or not?
Whether additional services make sense or not depends on usage behavior. A simple, free credit card with no additional services is sufficient for consumers who only rarely or predominantly use their credit card as a means of payment. On the other hand, many users may benefit from extra services such as travel health and luggage insurance, residual credit insurance, accident insurance or bonus and discount points when shopping. But even then it is worth checking: for example, are all benefits included in travel health insurance or is a separate insurance policy (from 10 dollars per year for an individual) not cheaper and better?
Always keep an eye on spending
Despite the numerous advantages that credit cards offer, they can also lead to a debt trap. For example, if you use your credit card to get money from an uncovered account, you quickly become indebted. Because the short-term liquidity that the credit card offers can be expensive. For example, there are high overdraft fees as soon as the credit card bill is due and the account is not covered. The situation is similar with credit cards, where the balance can be paid in installments. Here too, many banks charge a high interest rate for installment payments.