Unlike other payment cards such as debit cards and prepaid cards, a credit card lets you carry a balance and pay back the credit at a later date. As a cardholder, you can use your credit card to pay on “credit”, hence the term “credit card”.
Credit card bills: Variables
Paying your credit card bill is easiest accomplished via a recurring payment from your checking account. Alternatively, you can also have the bill sent via post (with a deposit slip) or as an electronic bill. If you choose to pay your bill at the post office using a deposit slip, you will pay a fee of between CHF 1.50 and CHF 2 per deposit slip.
Another drawback of paying your credit card bill via deposit slip is the risk of making a late payment (due to travel or misplacing the slip, for example). If you don’t make your payment on time, you will have to pay a late-payment fee and any interest charges accumulated.
Alternatively, you have the option of paying back just part of your balance. The way in which these installments are handled varies between card issuers. The cost of carrying a balance also varies depending on the credit card company.
Payment not made on time?
Depending on your card, the grace period within which you must pay your credit card bill will be anywhere from 15 to 25 days from the billing date. If you do not make at least the minimum required payment by the due date, you will usually be charged a late-payment fee.
The late-payment fee at many Swiss card issuers (Cembra Money Bank, Viseca) is 20 - 30 francs. However, it can come to 60 francs (UBS). Additionally, credit card issuers have the right to freeze or even close your credit card account.
Penalty fees compared
What many cardholders do not know is that in addition to the late-payment fee, a penalty interest rate will also apply. This penalty rate is, technically speaking, an effective interest rate. It usually matches the maximum legal interest rate limit for credit cards (12%), or comes close. Current interest rates for each credit card are shown on each card’s info page in the moneyland.ch credit card comparison tool.
Penalty interest rates apply from the payment posting date
Important: Many Swiss credit card companies charge penalty interest rates based on the date that each transaction was posted. UBS, Cornèrcard und Cembra Money Bank all use this method of calculating interest. The penalty interest you owe is calculated right from the time that each purchase or cash advance was made. Other issuers like PostFinance and Viseca calculate penalty interest relative to the payment due date (which is better for you as the cardholder).
Also good to know: With most credit card issuers, the penalty interest rate applies to your entire balance when you don’t make your payment on time. Even if you pay off part of the balance when you make your late payment, you will still be charged penalty interest on the total amount until you make the next payment. After that, the penalty interest rate will only apply to your remaining balance until it is paid off in full.
Credit balance options compared
The option of carrying a balance is a basic feature on the majority of Swiss credit cards, as per their terms and conditions. But some cards, such as those issued by Viseca or Credit Suisse, require that you specify whether you want the option of carrying a balance when you apply.
As a rule, you have to make a minimum payment equal to either 5% of your total balance or, depending on your credit card, an amount between 50 and 100 francs (or 50 to 100 euros or US dollars in the case of a foreign currency account). The balance you carry cannot exceed your credit limit.
Credit limits vary
The line of credit you get depends both on which credit card you use and on how creditworthy you are. If you want the maximum line of credit available with your card, you will normally have to apply for it. Your card’s issuer will then review your credit application and decide whether or not to grant you the higher credit limit. You can usually get a higher line of credit anytime, as long as your ability to pay meets the requirements. If your spending exceeds your credit limit, the credit card company can demand that you repay the excess immediately.
The general rule here is: Standard credit cards generally have a maximum credit limit of 5000 to 10,000 francs. Gold credit cards may offer longer lines of credit, and depending on your creditworthiness, you may be able to choose your credit limit yourself. Most of the expensive Platinum credit cards do not have a fixed credit limit.
Credit cards in Switzerland compared