Credit cards: important services & popular additional services

Partner card, travel health insurance, credit line, bonus programs – additional services with credit cards can be worth a lot in the event of an emergency. Especially high-quality credit card types use it to advertise. But do they really make sense? What you should know about it now.

Additional services should make the difference

Additional services should make the difference

Better credit cards are not just limited to cashless payments and the ability to withdraw cash quickly from ATMs worldwide. Well-known companies in particular now offer far more than classic services through exclusive card products. Second card for the spouse, loans in the form of overdrafts, bonus programs and even typical insurance products – the differences in terms of additional benefits can sometimes be very large. What the partially non-sectoral services promise and what needs to be considered.

Which insurance policies are offered

Which insurance policies are offered

International travel health insurance:

The additional service is worthwhile for you if you are traveling outside of Germany. Because the statutory health insurance does not cover the treatment costs completely or not at all depending on the travel destination. The cash register never pays for return transport.

Travel health insurance protection should apply worldwide and regardless of whether you paid for the trip with a credit card. If you are traveling with family, your relatives should also be insured. Diseases that are known before the trip are generally excluded.

Luggage insurance:
Your luggage is also insured if it is damaged or does not arrive at the holiday destination. As a rule, a maximum insurance sum applies, especially for documents and cash. In addition, there is usually a deductible, around 10 percent of the insured loss.

Cancellation insurance:
If this insurance is included and you have to cancel the trip for an insured reason (e.g. serious illness or loss of job), the insurer will cover the cancellation fees. The protection should apply regardless of the card used and should also apply to fellow travelers.

Fully comprehensive rental car protection
If a rental car is rented on vacation, the credit card also includes comprehensive insurance to protect against damage caused by extreme weather events or personal negligence. This often proves to be cheaper than a degree on site.

Car protection letter:

If you are traveling by car and suffer an accident or breakdown, a rental car, towing service and repatriation are organized and any accommodation costs are covered.

Payment facilitiesk

Payment facilitiesk

Credit line:
If the payment card has a credit line, the expenses will not be debited from the corresponding current account within a few days. Rather, this happens once a month. Up to this credit card statement, you are granted a small loan, so to speak, mostly without interest. Credit lines for charge cards are typical. The credit limit determines how high the small monthly loan may be. The credit card limit is usually one to two months’ monthly salary.

Partial payment option:
Some premium, gold or platinum cards now include partial payments, also known as revolving credit. If this is included, you can pay your credit card statement in installments. When paying in installments, debit interest mostly accrues from the time of settlement, which can be comparatively high. The installment payment option cannot always be excluded.

Bonus benefits:

Bonus benefits:

Cashback:
Use your credit card to pay with it, benefit from the cashback program in the form of a repayment at the end of the year, quarter or month. About 0.5 to 2 percent is common. The prerequisite is that a certain minimum sales volume is reached. In some cases, an immediate discount on the purchase price is also possible.

Discounts:
Credit cards can offer attractive discounts for certain activities. Savings potential can be seen by booking a rental car, hotel or a cruise. The prerequisite for this is that the booking is made through a partner company.

Bonus programs:
Every time you use your credit card, you will be credited with points or miles. If you have collected for a correspondingly long time or have spent a certain amount on your credit card, you will receive a bonus. For example, you can save on your next hotel stay.

Partner card:
This is a second card that refers to the same checking account. For example, it can be used by the life partner, spouse or another family member. They are entitled to the same uses as you as the holder of the main card. The partner card is usually billed via the main card. The second card is not always given free of charge. Any fees should also be taken into account when comparing credit cards.

To what extent additional services make sense

To what extent additional services make sense

This basically depends on your needs. If you travel frequently and if a high level of protection is important to you, travel insurance can definitely be recommended. Illness or traffic accidents on vacation are not uncommon. If these services are integrated in the credit card, you can save yourself the expense of purchasing a separate travel insurance package.

Credit lines allow you more freedom of payment. Think about how high this should be and whether the credit card institution charges interest on it. This can be particularly high for installment payment options if the loan is only repaid in installments.

Bonus benefits and discounts always sound good. However, these should not lead to additional purchases. It is also necessary to check whether a hotel room or rental car is otherwise not even cheaper. Partner cards for use by the partner are often useful. However, pay attention to any fees here as well.

Here you will find a list of all important and popular (additional) credit card services. We provide you with detailed descriptions and give tips on what to look for when choosing an additional service.

  • Car rental insurance
  • Partner card
  • Foreign insurance
  • Cancellation insurance
  • Limits
  • Airport lounge access
  • Contactless payment (NFC)
  • Cashback
  • Installment payment
  • Credit (rechargeable)

How do banks make cash loans?

Low interest rates meant that banks cannot currently charge interest higher than 10% per annum to borrowers.

This was caused by the rule of the Civil Code:

maximum nominal interest – based on it, the bank calculates installments with interest – should not exceed twice the reference rate of the Fine Bank (today 1.50%) plus 7 percentage points

Four years ago, banks could charge up to 25% of interest.

 

What if no interest?

money loans

The banks had to make up for it somehow. Or maybe commissions? Until March this year, there was no statutory limit as to their amount. Currently, it is already in force, but it is set at a painless level for banks of 25% regardless of the repayment period plus approx. 2.50% for each repayment month (in total eg 55% for loans for a year, 40% for loans for half a year or 27.50% with a monthly offer ).

An additional attempt on banks’ income was joining mandatory insurance loans, but this was hindered by the recommendation of the Polish Financial Supervision Authority: the principle that even if the bank requires the purchase of a policy, the customer can find an offer on the market that will suit him or not agree to the one proposed by the bank. The chart below shows a clear jump in commissions in April 2015.

Today, the average commission for granting a cash loan for 10 thousand dollars per year is around 9-10%, and four years ago it was 2.50-3%.

 

What does this mean for the borrower?

What does this mean for the borrower?

Customers who borrow for a short time pay more. This is indicated by the Annual Annual Interest Rate, which collects the total cost of the loan. For offers for 10 thousand dollars per year the market average APRC has increased over the last four years from approx. 24-25% to over 30%

The longer we want to pay back the loan, the better for us, because the longer we pay interest, which is currently relatively low.

You might think that it doesn’t matter if we pay for the loan in the form of interest or commission. For example, a problem arises when the liability is repaid early. Interest is charged on each installment, so if we repay the loan early, we won’t have to pay it for the “unused” months.

Lenders consider the commission as a one-off cost, they charge it at the time of payment (ie the debt is eg $11,000, but the client gets only $ 10,000), and they are not in a hurry to pay a proportionate part of it if the debt is repaid before time. The Office of Competition and Consumer Protection and the Financial Ombudsman took a critical position in this matter, but banks treat this fact simply as an irrelevant clue .

A cash loan of dollars 10,000 for 1 year, with the average commission market and nominal interest rate, will cost around dollars 1,382 today. In this amount, dollars 907 is a commission, and interest $475. The commission here is nearly 2/3 of the total cost of the loan. Four years ago the commission was less than 1/4 of the total cost of the loan.

The longer we repay the loan, the longer the bank collects interest, which means the share of non-interest costs – including commissions – in the total cost of credit decreases. After all, there is a big change here over the years. In 2012, in the loan model for $10,000 for 3 years, the commission was only less than 1/10 of the total cost of the loan. For comparison, today it is 40 percent.

Bank offers have therefore come close to those of loan companies, where the real cost is not in interest but in other fees.

Banks do not admit that they do not earn interest anymore and try to earn increases elsewhere. They further claim that “the commission is the Bank’s remuneration for activities related to the conclusion of the contract and the withdrawal of funds”, according to a Stick24 Bank statement.

 

Zero is not zero

money loan

It is often the case that banks, since they cannot collect high interest rates, simply give them up and place the entire cost of the loan in commission. Seeing the offer at a very low or even zero interest rate, it’s worth looking for hidden costs and asking for a commission.

How To Get The Mortgage Annuity Loan

It is a sort of “reverse and facilitated” mortgage: in fact, with the mortgage annuity, who already owns a property can borrow from the bank an amount of money equivalent to the value of a part of his home. The sum received will be guaranteed by a mortgage that is turned on on the property.

In this way, the applicant can obtain a considerable sum of money, for which he will not have to pay any installment, managing to maintain the ownership of the house, without compromising its transfer to the heirs.

The amount that can be requested, specifically, varies according to the value of the property (assessed by an expert) and the age of the applicant : the higher the age, the greater the amount that can be obtained. Older people can request up to 50% of the property value.

Requirements to access the loan:

  • The applicant must be a natural person and must be over 60 years of age (companies and legal entities are excluded)
  • Must own a residential property (shops, offices, commercial properties, industrial buildings, etc. are not included)
  • The property must not already be mortgaged

 

Refund procedure

mortgage loan

The financed subject has the possibility to pay off the debt at any time and obviously to cancel the mortgage on the house.

The legislation also allows the parties involved to agree on any repayment method: the beneficiary can in fact decide to pay only the interest accrued annually or agree with the lender a gradual repayment plan that includes both the interest and the sum loaned.

Instead, a mandatory full refund is provided, in a single solution, where the following events occur:

  • death of the recipient of the lifetime loan
  • transfer, in whole or in part, of the property or of other real or enjoyment rights on the property given as collateral (eg usufruct)
  • performing acts that can significantly reduce the value of the asset

If within 12 months from the occurrence of one of these three situations the loan is not fully repaid, the credit institution that granted the loan is entitled to sell the property at market value, being able to gradually reduce the price by 15% each year, until the moment of definitive sale.

 

The heirs can “redeem” the property.

The heirs can "redeem" the property.

As long as the borrower remains alive, he can safely live in his “mortgaged home”. The latter, in fact, does not become the property of the bank but is always burdened by a debt. It follows therefore that the house, upon the death of the financed subject, if the same has not provided for the early repayment of the loan, will enter in succession, but the debt will not be extinguished.

In this circumstance, the heirs are granted a double possibility:

  • pay off the debt within 12 months, returning to full ownership of the property, canceling the mortgage.
  • leave the property to the bank that will proceed with the sale, according to fair market prices in order to cover the debt (any difference between the sale of the property and the debt coverage will be paid to the heirs).

 

Advantages of the Lifetime Mortgage Loan

Advantages of the Lifetime Mortgage Loan

The lifetime mortgage loan is an interesting solution for anyone over 60 who is in financial difficulty, especially considering the widespread problems of access to credit for the category of retirees or in any case of the over 60s, who precisely because of their age usually more difficult to obtain financing with less guarantees.

To date, the solution most used to obtain liquidity consisted of the sale of one’s home at a reduced price, maintaining its bare ownership. This hypothesis, however, goes to the detriment of any heirs, who find themselves deprived of real estate when the subject dies. Thanks to the mortgage loan, however, they maintain the possibility of “redeeming” the house or otherwise they can still choose to sell the house, in order to pocket any difference after having paid the credit to the bank.

Another significant aspect to consider is that the life-long mortgage loan could represent the only financing possibility for all those over sixty who have suffered protests and / or negative reports in Crif and in the other databases. Even the so-called “bad payers” and the protested would therefore have the possibility, through the mortgage annuity, to access credit and obtain considerable liquidity that could be used to proceed with debt recovery, aimed at defining all the outstanding debt positions. with banks and financial institutions. You can get the loan by looking for a bank in your area that delivers the product.