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TUESDAY, APRIL 13, 2021 | Roman

FREE CREDIT CARD: VISA OR MASTERCARD?

FREE CREDIT CARD: VISA OR MASTERCARD?

Visa and Mastercard offer free credit cards. Both companies have no direct contact with the cardholder, but grant licenses to banks and savings banks. For this reason, there are many credit institutions that offer free credit cards. Banks are free to provide you with a credit card free of charge. Both Mastercard and Visa are accepted worldwide.

Tip: If you are unsure which provider to choose, the cost of a credit card can give you a good indication. However, it may also be worth your while to have a card from each provider - especially if you travel a lot and far. The reason for this is that cards are accepted differently in some countries.

Note: Do you often withdraw money in the USA? Then you should note that banks may charge extra fees for Mastercard cards - that is, in addition to the fees the bank already charges.

American Express and Diners Club are other credit card providers. However, these cards are accepted by fewer merchants than Mastercard and Visa. This is partly because Mastercard and Visa charges are regulated on the merchant side. This is not the case with Amex and Diners Club. So if you pay with such a credit card, the merchants may incur higher costs.

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FREE CREDIT CARD - THE VARIANTS

With free credit cards, there are different variants as far as repayment is concerned. When making your choice, keep in mind that sometimes high interest rates may apply, as is the case with partial repayment with revolving cards.

CHARGE CARDS: FULL MONTHLY DEBIT

With a charge card, the bank debits the money you use in full from your checking account at regular intervals. To charge the money, you receive a free credit. This can have an advantage for you: If you are short of cash, you can use the credit card to withdraw money instead of your checking card. This way, you won’t slip into overdraft and you’ll save on interest. In this case, however, pay attention to how much money you spend, as this only works if the account has sufficient funds.

REVOLVING CARDS: SEPARATE CARDS WITH OPTIONAL PARTIAL PAYMENTS

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With revolving cards, you don’t have to pay back the money the bank has advanced to you directly with your monthly statement. The bank only requires a minimum repayment and then carries over the outstanding balance to the next month. Banks call this “flexible repayment.” The disadvantage with these offers is that they are very expensive. The interest rates are higher than those you pay on the overdraft interest to the current account. You should avoid partial payment for this reason and always carry the entire debt. Some providers offer you the possibility that the entire money is automatically debited.

However, this disadvantage can sometimes be compensated in other areas. With many cards, withdrawing money worldwide is free of charge and there is also often no basic fee. Often you do not have to open an additional checking account for these cards. Properly set, they then work almost like charge cards.

It may happen that the bank makes it difficult for you to avoid partial payment. So, if it only debits in installments on its own, you will have to take action yourself. The best thing to do is to transfer the money to the card account - this way you avoid high interest rates. You should find out beforehand when the money has to be on the card account, as this may well be before the billing period. Providers usually inform you about this on the monthly statements, the FAQs or in the mails you receive about your account balance. Otherwise, you also have the option of asking support.

If the provider does not automatically debit the balance from your account, you should set yourself a monthly reminder, for example, so that you transfer the money to the card account on time. However, this is not the case with all providers.

DEBIT CARD: CARDS WITH INSTANT DEBIT

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With a debit card, the money is debited from the account a short time after payment or withdrawal - just as you know it from a Girocard (formerly EC card). These are therefore not real credit cards.

Note: Not all hotels and car rental companies accept debit cards. It is best to find out in advance which payment methods are accepted by the respective provider.

Debit cards offer you the advantage of keeping full cost control over your spending. However, you should keep in mind that the bank will not give you free credit, as is the case with a traditional credit card. If you use the card without having enough credit in your checking account, you will slip into overdraft. If your overdraft is not enough, the payment will be blocked. Some banks already block payments if you don’t have enough money in the account. So in most cases, debit cards make sense if you have a checking account at the same bank and have enough money deposited in it. If you have your main checking account elsewhere and regularly transfer money to your card account, the benefit of controlling costs is lost.

COMBINATION OF CREDIT CARD AND CHECKING ACCOUNT

There are offers where you can combine the checking account and the credit card. This gives you the opportunity to withdraw money worldwide free of charge. However, we do not recommend the credit card products here, as you have to use the Girocard to withdraw money for free in the USA.

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