Let us give you an example: John wants to buy the latest model smartphone but it costs €1,000, so he doesn't want to pay for it with his end-of-month credit card, as he would have to pay it all off at the end of the month and would be left with nothing in his account. Payment in instalments consists of paying for a certain purchase or transaction on credit and instead of paying for it all at the end of the month interest-free, you pay it off over the months you decide to split it over, including associated interest or paying a fixed fee, also reflected in the contract. To calculate your monthly instalment, you can go to the Bank of Spain's banking customer website where they provide a calculator to figure out how much interest you would pay and when you would end up paying off the debt under one or another level of monthly instalment: When you pay off the debt faster, you also pay less interest. If he increases the monthly instalment, he will pay off the debt faster. Each instalment includes part of the capital drawn down that John has to repay + part of the associated interest. If he doesn't spend anything more with his credit card, he will end up paying off his debt in a little less than a year, including associated interest. Instead, John chooses to modify the payment method for his credit card to deferred payment, choosing to pay a monthly amount of €150 for the reimbursement of the credit.
He expects an increase in expenses of around €1500, which he will not be able to pay all at once at the end of the month because he would run out of credit at the beginning of the following month. Let us give you another example: John's washing machine breaks down in December, just when he is focused on finishing his Christmas shopping and celebrating with friends and family. Only one comes with this payment method activated by default without the possibility of changing it, namely the deferred payment card (Visa&Go). All credit cards allow you to activate this payment method if you need it. When choosing the level of the monthly instalment you want to pay, bear in mind that the higher the monthly instalment you pay, the lower the total cost of the credit to be repaid, because you will repay the loaned credit sooner. Even if you spend more credit each month than the chosen instalment, you will only pay the chosen instalment, provided that it respects the minimum instalment limit established at any given time by CaixaBank Payments & Consumer so that the repayment of your debt is not dragged out excessively. This way you decide what monthly instalment you want to make to repay the credit drawn down. These two payment methods do require interest payments, which are specified both in the pre-contractual information (INE) and in the contract.ĭeferred payment consists of putting off (or deferring) the repayments for the credit you spend through the payment of a monthly instalment, instead of paying the total amount at the end of the agreed settlement period. The card also allows other payment methods that you must expressly request, such as deferred payment of all the credit you have on a monthly basis, or payment in instalments of a certain transaction or purchase. We will charge it to the account associated with the card. John will start to pay back the money spent on the dinner without interest from 1 May. This dinner was purchased on credit, meaning he doesn't need to spend the balance in his account on the actual day of the dinner with his friends. The credit card is used as a guarantee for the car rental and is also used to pay for dinner. He decides to use his credit card to rent a car and invites his friends to dinner. Let us give you an example: John takes a weekend getaway with his friends on Friday, 14 April. This will be the default payment method for cards with the end-of-month payment modality (such as the Visa Classic). You will not have to pay interest for this. at the end of the month, if you choose the monthly settlement period).
A credit card with an end-of-month payment modality involves you paying off the credit you used for your purchases at the end of the agreed settlement period (e.g.
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