Quick credits and 'revolving' cards: beware of the fine print
Throughout the year there are some moments of economic hardship that lead consumers to consider financing mechanisms that allow them to get money quickly and easily. This is the case of quick loans and revolving cards. If you are thinking of using one of them, read the following report from the Consumer Portal first.
The first are credits offered by banking entities, as well as some private companies, which hardly require any guarantee, since they do not require payroll or guarantees. These credits must be returned in short terms.
Brianda deferred payment cards, better known as `revolving´ cards, allow us to defer the payment of purchases from month to month, which allows us to always have a credit ready for contingencies.
However, caution must be exercised with these products, since, in exchange for the speed and "ease" of grant of money, the return conditions are not at all favorable for the consumer, due to the high interest that they demand. In the following report, we detail the main characteristics of each of these operations.
Deferred or revolving payment cards
Revolving cards are a mode of credit cards that allow you to return the purchases made with it in installments, through regular installments that include the payment of some interest and commissions. They have an established credit limit available and, with each installment paid, you can re-dispose of the capital amount which is amortized.
You must have special precaution with the use of this type of cards, since the interests that are applied to the indebted capital are elevated and range between 20% and an 30%. A very high percentage that is accompanied, as a general rule, by a fee small monthly with respect to the accumulated debt, which causes the total amortization to be carried out in a very long term and the amount of interest is increasing.
Likewise, this type of card makes it impossible to issue a prior amortization schedule (as it happens, for example, if a loan is contracted), since both the debt and the monthly installments to be paid are variable.
It is convenient that before decide to finance the payment With one of these cards, you will find out what interest you are going to pay. For this it is very important to request the APR (Annual Equivalent Rate), which tells us what the global interest on the indebted capital is.
If you need to use this card to make a transaction, try to use it to defer a single purchase and save it until all debt has been settled. In this way, you will avoid generating more debt and interest.
However, if you decide to finance your payments, request a detailed detail of their operations carried out, so that the outstanding debt is reflected as clearly as possible.
In addition, in the event that the repayment of the debt is going to be made in a long period of time, it is convenient that you request to be informed periodically about:
- El expected payback period, that is, when will you finish paying if you do not make any other movement or expense,
- Un example of different scenarios about the possible savings that would increase the amount of the fee,
- El monthly installment amount, that would allow him to pay off all the debt in one year.
From October 2022, the Bank of Spain obliges financial institutions to offer detailed information about this type of contracts.
They are loans that are characterized by the speed in granting, although at a price that is usually higher than other financing operations. Barely require paperwork and procedures for your grant. With the DNI, the payroll, a receipt and the data of our bank account we can request this type of loan. In addition, they are very flexible to return the money to the bank.
However, as a general rule, the interest rate applied to these credits usually top to the usual in personal loans and it is usually mandatory to take out insurance to cover the risk of non-payment of the loan in certain cases.
The companies that offer these financial products are sometimes not credit institutions. All of them are required to meet a series of requirements regarding the information they have to offer consumers before contracting, among which are:
- Full Information about the general contracting conditions and the relationship of expenses and commissions that affect (for example, in case of non-payment).
- If in their advertising they refer to figures related to the cost of the loan, must include the Annual Equivalent Rate (APR) with an example.
Tips and recommendations
- In the first place, it is convenient that, as in the contracting of a service or in the purchase of a product, request information from several banking entities o companies and compare between the different offers that offer you the one that best suits your needs.
- Read carefully and carefully the general conditions of the contract before contracting a revolving card or a quick credit.
- Remember that you can exercise your right of withdrawal of any banking product that you contract remotely (online, by phone, for example). You have at least 14 calendar days to withdraw from the contract, without having to give any explanation.
- Check the list of expenses and commissions they may charge you, to avoid additional costs.
- Some credit cards offer the deferred payment method. In this case it is important that:
- Make sure when using it that you do not have the deferred payment option activated by default.
- In the event that you need to use your card to finance a deferred purchase, find out about the APR of the operation, that is, the percentage of interest that you will be charged.
- Reset the card to the payment method at the end of the month, once you have paid that expense.
For more information on credit contracts, consult the next report of the Consumer Portal.
The General Directorate of Commerce, Consumption and Services has published a pill on the contracting of consumer loans and related loans, which includes prominent information on what to consider when hiring one.
If you do not agree with any concept or commission that you have been charged, or with the actions of the company, in the case of a credit institution, write to Customer Service. If you have not received a response within a month or you are not satisfied with the one offered, you can contact the Claims Service of the Bank of Spain. You can also contact the courts of Justice.
If the company is not a credit institution, check if it is associated or attached to the Spanish Association of Microloans (AEMIP), in which case, you can appeal to their code of practice. In addition, the Bank of Spain offers on its website a list of registered credit institutions. If you need to request one, you can do it with any of them.
Updated August 29, 2023