Credit cards in Germany – conditions for obtaining, pros and cons

What types of credit cards exist in Germany, how payments are made. How debit cards differ from credit cards.

Credit card situation in Germany

The presence of a credit card (Kreditkarte) in the wallet gives the owner more advantages. And the point here is not the ability to conveniently pay for goods or services in different countries. The main function of a credit card, because of which it must be taken, is the issuance of short-term loans at zero interest at the time of payment.

In 2015, 950 million transactions were processed in Germany through Kreditkarten with a turnover of 84 billion euros. However, the credit card is not very popular with burghers. According to statistics, Germans are much more willing to pay in cash or EC-Karte. Credit cards in retail trade in the country account for 5% of payments. Although 32% of Germans carry them in their wallets!

Of the 33 million credit cards issued in Germany, 30 million bear the Mastercard and Visa logos. Organizations split the market in half. Other popular issuers are American Express and Diners Club.

The Germans use the term “Kreditkarte” as a synonym for all plastic cards with the Visa, MasterCard, American Express and Diners Club logos. This introduces some confusion, since the financial mechanisms behind the same names can be completely different.

Types of credit cards in Germany

Chargekarte – refillable

A credit card generally accepted in Germany allows you to pay without thinking about the state of your bank account for a month. On a monthly basis, the credit institution notifies the owner of the amount that he spent and must repay. Depending on the terms of the contract, this happens immediately upon receipt of the notification, or after a short period of time. Thus, the client receives an interest-free short-term loan, which is very convenient in situations where a person has a stable income and he does not go beyond his financial capabilities in the process of consumption.

Such a credit card can be obtained from a bank where a German current account has already been opened . Monthly payments are made automatically from the Girokonto linked to your credit card.

But nothing prevents you from receiving a card directly from one of the credit organizations, specifying an existing current account in a German bank as a source of money.

Klassischen Kreditkarte – classic

Another name is Revolvingkarte. This is the American version, although it is also found in Germany. The owner of the credit card uses it for a month and receives regular bills. But it is not required to extinguish them completely immediately. There is a certain limit that must be paid: it is a fixed percentage of the spent or a certain amount. The rest of the debt is carried over to the next month and is subject to interest according to the contract.

This allows you to combine interest-free short-term loans with loans at a fixed interest rate, which can allow you to borrow at more favorable interest rates and not bother with a loan .

The ability to “extinguish” the minus on the account or increase it at any time gives great flexibility in conducting financial affairs. But such a credit card in a German bank will not be given to just anyone. This is where you need excellent SCHUFA – proof of customer creditworthiness .

Debitkarte – debit

Such a card, although issued by the same credit organizations that issue real credit cards, does not allow making any loans. Its function is to make payments or withdraw money from an ATM anywhere in the world by using Visa, MasterCard and so on. In this case, the payment is immediately redirected to the current account in the German bank linked to the card. In fact, this is the “international” version of the EC-Karte, which can be used not only in Germany.

Daily-Chargekarte – Rechargeable-Debit

As the name implies, this is a combination of a debit card with permission to take out a short-term loan under the Chargekarte scheme. If there is money in the account, it is spent on payments first. When you reach zero amount, you can go to the “minus” within certain limits. The debt must be paid off monthly and in full.

This option is more profitable than the “dispo-loan” – the possibility of an automatic loan on a German bank account. The credit card allows you to borrow for a period of time until the end of the month at zero interest, while going into the “minus” by Girokonto is subject to a commission of up to 17% per annum from the first day of the loan.

Prepaidkarte – pre-funded

Not everyone can get the coveted credit card.

For those who are rejected by German banks due to some problems with SCHUFA, the only way to use non-cash payments outside of Germany is with prepaid cards (Prepaid-Kreditkarten).

The client simply “uploads” money to the account linked to the card and can use it whenever he wants. It is impossible to spend more than on the card. The bank does not provide a loan in the classic form, so the client is protected from debt, and the bank is protected from losing money.

Prepaid-Kreditkarte functions like a regular credit card: it is used to make purchases on the Internet and abroad.

Be careful when booking a hotel or renting a car. In such cases, Kreditkarte is used as a guarantee of payment. But due to the lack of a credit function in Prepaid cards, some organizations do not accept them. Better to check in advance.

The disadvantages of a prepaid credit card include restrictions on the available amount – usually it is allowed to spend several hundred euros per day.

Another disadvantage is the commission for crediting money to the account (Aufladegebühr). The cost of replenishment differs greatly depending on the specific method of transferring money to the account.

The only advantage of such a card is that any bank issues it to everyone indiscriminately, including terrible debtors or minors.

Virtuelle – virtual

One of the most common uses of a credit card in Germany is to use it to pay for purchases in online stores.

The PayPal instant payment service, where linking a credit card to an online account allows you to pay at the speed of receiving an email, that is, within a few seconds, is gaining customers especially quickly. For the transfer, only the presence of an e-mail is required, the seller and the buyer do not see each other’s banking data.

PayPal transfers money to the seller’s online account and withdraws it from the buyer’s linked credit card, which in turn works according to one of the schemes described above. It’s fast and convenient.

The question arises, why then keep a plastic card at all, if you can get by with only data about it? This is how the idea of ​​a “virtual” credit card arose: the card itself does not exist, but the owner receives a number and a CVC / CVV code, which allows using the data on the Internet like a regular credit card.

Most often in Germany, this method is used to create a virtual Prepaidkarte.

Bonus programs

Since credit cards are mainly used for travel, German banks often attract customers with bonus programs and additional services that are beneficial for travelers. For example, insurance: against accidents or legal, medical insurance for the duration of the trip , in case of trip cancellation or loss of luggage.

The most common additional services:

  • Vacation insurance (Reiseversicherung): This includes insurance against doctor visits when traveling abroad and financial costs due to travel cancellations.
  • Car rental insurance: A huge number of options are possible, from supplementing compulsory car insurance (Aufstockung der Haftpflichtversicherung) and full CASCO insurance (Vollkaskoversicherung) to legal insurance (Rechtsschutzversicherung) .
  • Einkaufsversicherung: Some German shops offer insurance for merchandise paid for by credit card.
  • Discounts: Issuers attract customers through discounts and bonus programs. The most common offers include discounts at gas stations or point accumulation systems, which are accrued based on the amount spent.

Despite the bonuses, if you want to get a German credit card, you must carefully read the terms of the contract. The annual fee for a card in Germany can range from 0 € to 100 €.

Free credit cards in Germany

Yes, sometimes German banks also offer customers free credit cards, which are subject to relatively low commissions for payment or cash withdrawals. At the same time, customers can use the full functionality.

Free credit cards usually come in addition to a checking account (Girokonto). The credit on the card is repaid from the funds on the account, this happens on a monthly basis. The limit for the use of funds by credit card is set by the bank. It is also possible to pay the amount in installments, in installments. In this case, the bank offers a special interest rate for using the loan. In general, the conditions are highly dependent on the type of German credit card.

What do “gold” credit cards give

“Gold” and “platinum” credit cards, so popular ten years ago, are no longer reserved for an exclusive clientele and are available to everyone. Along with the purpose – to emphasize the status of the owner – they make it possible to use a whole range of additional services, such as insurance, discounts, special bonus programs and additional services. For example, access to Lounges at the airport or consultation. Customers can take advantage of emergency assistance if they lose their card or documents, and book a flight or hotel. The cost of such “pleasant services” is usually included by banks in the annual fee or the high cost of payment transactions.

When purchasing a gold or platinum card, the decisive question is whether the additional services received affect the value of the tariff and whether they are already covered in some other way. For example, private health insurance holders do not need separate travel insurance (Auslandskrankenversicherung). The same bonus from the bank in this case will be useless. In addition, these services are often accompanied by some restrictions, a greater degree of self-service, or encourage spending more money on the services of a particular provider.

Possible expenses when using credit cards

It is worth considering in advance for what purposes the credit card will be used most often. For those traveling light, the commission when paying or withdrawing money in another currency plays an important role. And for auto travelers it is more profitable to choose a discount at a gas station.

Withdrawal fee ( Abhebegebühr ). This commission is possible when customers withdraw cash from the card at an ATM or branch in Germany or abroad. And although banks claim to issue funds free of charge, this only means that they do not charge a commission. Especially in countries outside the European Union, ATM companies may charge fees that banks would not normally reimburse.

Currency Conversion Fee ( Fremdwährungsgebühr ) – This fee may apply when withdrawing funds in currencies other than Euros. Most often it is expressed as a percentage of the amount withdrawn.

Interest on a loan ( Kreditzinsen ) – can be charged if there are not enough funds in the account or the account has not been paid in full within the specified period. Since these compulsory interest is much higher than with other loans, this option should be used only as a last resort.

Inactivity Fee ( Inaktivitätsgebühr ) – If the card is not used frequently enough, some issuers may charge a fee.

Withdrawing or replenishing in foreign currency – if the client is outside the Eurozone, then when replenishing the card or withdrawing funds from it, it is often asked whether the amount should be calculated in euros. You should always choose your local currency, as when choosing the euro, the ATM company performs the conversion and pledges a large margin. And when choosing a local currency, the conversion takes place according to the exchange rate of the credit card provider, which can be seen on the Internet and which is usually more favorable.

The situation is similar if the machine automatically offers its own exchange rate, which is usually worse than that of the card issuer. In this case, it is recommended to withdraw money without exchanging currencies.

When using a German credit card on the Internet , additional commissions are possible, for example, when booking flights. You should always pay attention to such extra charges and, if possible, choose other payment methods. Many companies accept direct bank transfers .

Credit card bills must be paid on time. Customers must take care that the amount for the Girokonto is sufficient in due time. Otherwise, the interest that must be paid will be much higher than with any other loan. Therefore, you should only allow exceeding your account limit in exceptional cases.

In addition, there are many other commissions, for example, when replacing a card or issuing an additional (or partner) card.

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Igor Smith/ author of the article
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