Credit card, debit card, charge card …
A payment card may be a strange term for many consumers and is easily perceived as the same thing as a credit card. Know the terms and read our guide on credit cards.
However, a credit card and a debit card are two different things that should be distinguished. Both have different features and benefits that you should be aware of before making a purchasing decision.
What is a payment card?
A payment card is a payment card issued by a card company or bank that can pay for purchases, withdraw money and usually pay for e-commerce purchases both in Finland and abroad. Unlike a credit card, purchases cannot be made in smaller installments on a monthly basis, but the invoice is billed to the cardholder once a month. The invoice should always be paid off in one go.
In most cases, the payment period is interest-free, so the card can be used without worrying about any interest charges. However, the card cannot be used with great care, as it is usually subject to a monthly usage limit based on the customer’s income.
The ability to pay an invoice is therefore of paramount importance, because unlike a credit card, the payment card does not offer the possibility of smaller installments with the interest rate, and the amount used must always be paid off by the due date. Interest on late payment and recovery costs shall apply to late payment.
Having a specific due date for your payment card is a good thing in that you need to think more carefully about using the card. After the deadline payment, there must always be enough money to pay the entire bill. On the other hand, a tight maturity date can also be a bad thing as there is no way to flex your bill by paying it off with interest after the due date.
And what is a credit card?
A credit card is a charge card that includes a credit feature. In addition to the non-interest payment period, the credit card company that issued the card offers the customer the opportunity to pay for purchases in installments after the due date. However, the credit card bill receivables must be reduced by at least the agreed minimum repayment amount and thereafter the remaining interest shall be payable at the agreed rate.
Some cards, such as MasterCard, automatically include a credit feature. While some cards, such as Visa and Diners Club cards, can be applied for. With a credit card, the customer can stretch the payment deadline by paying a portion of the invoice later, within the agreed credit line.
However, credit card receivables often need to be reduced to at least the agreed minimum payment, which is usually a percentage of card purchases, for example, 10-100%. However, the down payment usually has a minimum amount, such as € 30.
If you’re interested in a credit card, it’s a good idea to compare prices in our comparison before making a purchase:
Credit Card Comparison
The customer is usually allowed to choose a percentage of the card when applying for the card. The invoice accrued after the non-interest payment period shall be subject to contractual interest. The interest rate varies depending on the issuer card, for example the interest rate for Good lender Credit Card is 3 months euribor + 8.5 margin.
A credit card is a good choice because of its flexibility. You can pay the invoice in installments and at any time that is convenient for you, provided, however, that after the non-interest payment period, you must pay interest on the credit.
A small stretch in payout time is not very expensive and is often a better option than borrowing. A credit card is a good option when it comes to using it wisely and paying off a used credit at a relatively short notice – preferably within an interest free payment period.