7 Mistakes to Avoid with your Spanish Credit Card
Whether you’ve had a credit card with the same provider for years, or you’re looking for a new one, there are a few things to avoid.
Applying for a revolving card (by mistake)
Some credit cards are issued with a “revolving” repayment system, where you don’t have the option to pay off in full. So even if you only use the card from time to time you’ll always be paying interest on your purchases.
Check the small print before applying. If you have any doubts check with the provider.
Paying a high annual fee without receiving any perks
Bank commissions in Spain are on the up. You may be paying 50€ or more every year for a credit card that comes with no perks. You might also have to use the card two or three times a month to avoid even more fees.
If you’re stuck with your bank, for example because your mortgage rate is linked to other financial products, it may not be easy to avoid these charges. However it pays to do the maths and know exactly how much you are paying for each bank service – you might be better off going elsewhere.
Forgetting about the free insurance that comes with your card
Most cards include insurance, such as travel cover. Some also include cover for accidental breakage and even life insurance, however it’s easy to forget about it when we need to make a claim.
This insurance will only usually be valid when you’ve paid fully by card, for example for plane tickets.
Not changing the default repayment method
Some providers are sneaky and set the default repayment method for a new card as the minimum monthly amount. As cards come with a high interest rate, normally between 20-25%, as soon as you get a new card check the repayment terms and change to pay off in full monthly.
If you do have a month or two where you need to spread out the payment, call your provider. Usually you can make a temporary change to the repayment method before the monthly cut-off date for changes.
Not keeping control over what you spend
Keep your receipts to avoid a nasty surprise at the end of the month. Most card providers have an app where you can keep tabs on your spending. Check regularly just in case there’s been any suspicious activity on your card.
Only paying off the minimum every month
Being in debt for years is never a good idea, but that’s what will happen if you only pay off the minimum. This can be calculated as either a percentage of the total owed or a minimum amount, eg 5€ per month. If you’re carrying 5000€ of debt on a card, with minimum repayments it could take you over 20 years to repay it. Plus you’d need to take into account all the interest that would be added to your debt.
If you can’t pay off the full amount, try and repay as much as possible. In this way you’ll avoid getting into a downward spiral of debt and interest charges.
Taking out cash with your credit card
Even if you’re careful with your card, there could be a time when you’re tempted to use it to withdraw cash, for example if you’re abroad.
Using your credit card for cash means paying interest from the day of withdrawal as no grace period is applied. Additionally the interest rate may be higher than the normal rate as you may be charged a cash advance fee.