Credit cards

Credit cards are a convenient and flexible way to pay for things without having to carry cash. And if you use them wisely, credit cards can be one of the cheapest sources of credit available.

If you are worried about credit card debt, check out our information.

How credit cards work

With a credit card, the money you spend is a loan from your credit card provider. Your credit card provider sets the maximum limit you can spend on your card (listed on your statement), which you can spend either straight away or gradually over a period of time. Under the Central Bank’s Consumer Protection Code your credit card company cannot increase the limit on your card without your permission.

Each month, your credit card provider will send you a statement that shows:

• How much you spent since the last statement
• Any cash you withdrew using your card
• Any interest due
• The total balance – this is the amount you owe
• The minimum payment that must be made by a set date, called the due date. The minimum payment is usually around 2% to 5% of the total amount you owe. But you should try to pay off all or as much as you can of your monthly balance. If you only pay off the minimum balance on your credit card each month, it will cost you a lot in interest and could take several years for you to pay off a large balance.

Think about setting up a direct debit to pay your credit card bill every month before the due date. This helps you to avoid late payment fees and also helps you to keep your credit card debt under control. You can set up a direct debit for a certain percentage of the bill, or a certain amount every month so that you are not tempted to only pay the minimum balance.

Interest and how it is charged

The amount of interest you are charged depends on the
APR on your card and how you use your card. Interest rates on credit cards can range from 13% to 26%, sometimes well above that charged on overdrafts and personal loans. Use our credit card Money Tool to check current rates of the main providers.

• If you pay your bill in full before the due date you will not be charged any interest. This is called the ‘interest-free period’. This varies from one credit card provider to another, but is generally about 56 days. Be aware, however, that most credit card providers don’t offer an interest-free period for cash withdrawals so you will be charged interest from the date you withdraw the cash.
• If you only pay off the minimum repayment it will mean you will pay more in interest and it will be harder to reduce what you owe on your card – unless you start to make larger regular payments to reduce it.
• If you pay off part of the bill, you will very likely be charged interest on all your purchases from the day you bought them. For example, if your statement shows you owe €1,000 and you pay off €900 by the due date, most providers will charge you interest on the full €1,000 until the date your payment reaches your credit card account. After that date, you will be charged interest on the €100 that remains unpaid and on any new purchases you make. You should check with your provider first to see how interest is charged and read your terms and conditions very carefully.
• If you use your card for purchasing and withdrawals, you can see from our credit card Money Tool, providers usually charge different rates depending on whether you use your card for purchases or cash withdrawals. If you are in the habit of using your card for both and/or carry over outstanding balances regularly, then check the terms and conditions of your agreement with your provider so you can work out how you are charged. You may get a better deal elsewhere, so if you are not happy, see if your provider is willing to negotiate a better rate with you or else consider switching.

Other fees and charges (including Government stamp duty)

Fee	Reason for charge
Over credit-limit fee	You are charged this each time you have gone over the agreed credit limit, and your provider may refuse further transactions on your card.
Cash advance fee	This is a transaction fee charged each time you make a cash withdrawal. Some providers charge this fee even if you have already paid enough cash into your account to cover the withdrawal amount.
Foreign exchange fee	This is a fee for every purchase and cash withdrawal in a currency other than euro.
Late payment fee	You pay this if you do not pay at least the minimum repayment by the bill due date.
Unpaid item fee	You pay this if your payment is returned unpaid. For example, if a direct debit is not paid or a cheque bounces.
Replacement cards and PIN	You may have to pay a fee to replace your cards and PIN if your card is lost or stolen or if you forget your PIN.
Government stamp duty	You have to pay an annual tax, which is usually deducted from your credit card account on 1 April for each account held at any time in the previous year. You pay stamp duty for each credit card account you have during the previous year. Check the Revenue website for information on the amount of tax you must pay. Get information on how stamp duty is collected if you are transferring your credit card balance or closing your account.

Additional authorised users

You may decide to ask your bank or card issuer for an additional card to be sent to a person named by you, such as your spouse or partner. By giving an additional card to someone else, you give them permission to spend money on your card, up to its credit limit, and you will be liable for any debts they run up.

Stamp duty is charged on the credit card account and not the number of cards, so no matter how many cards are operating on the account there is only one amount of stamp duty chargeable per year.

Disputed transactions

Sometimes you may want to dispute a card transaction because:

• The transaction was not authorised by you
• The supplier did not deliver the goods or services you paid for
• The goods were delivered to you but were faulty or not as described

You should contact the supplier first, to seek a refund. If the supplier will not refund your money and you paid using a credit or debit card, your card provider may agree to reverse the transaction.

This is called a chargeback. In order to start a chargeback, you should contact your card provider immediately. Give them details of the transaction you are disputing and request that they follow it up with the merchant’s card processor. This is the bank that processes card transactions for the business that debited your card.

If you request a chargeback and you are not happy with the response from your card provider, you can make a complaint.

Dispute rules for each card scheme vary. This can be important if a retailer or service provider you have done business with goes out of business.

If there is a transaction on your bank account or credit card statement that you do not recognise, contact your bank or card issuer immediately.

Switching your credit card and transferring your balance

Credit card providers may offer new customers a low interest rate (or no interest) for a set time if they transfer their balance to a new card. You can use our credit card Money Tool to see what rates are currently on offer but make sure to check:

• How long the low rate will apply and whether you think you can pay back what you owe before the rate increases
• Whether the reduced rate applies only to the transferred balance or also to new purchases and cash withdrawals during the offer period
• What the rate will be after the introductory offer ends

If you are switching credit card, make sure you close your old credit card account so that you are not tempted to spend money using both cards. Remember that you have to pay stamp duty before you close your old credit card account. Ask your old credit card issuer for a Letter of Closure, which proves that you paid the stamp duty for that year. Give this letter to your new credit card issuer as soon as possible so they do not charge you stamp duty again.

Remember, if you don’t close your old credit card, then you will be charged stamp duty twice.

Payment protection insurance (PPI)

Don’t assume a credit card account is closed just because you have stopped using the card. Even if you don’t use the card, you will be charged stamp duty every year, until you tell your credit card provider to cancel your card. Make sure you cancel, in writing, any direct debits you have set up on your credit card, such as a magazine subscription or membership of a club.

When you apply for a credit card, you may be offered payment protection insurance. This insurance is optional and usually only covers the minimum payment and only for a limited period of time if you cannot work for reasons covered by your policy. Read more about payment protection insurance.

When can your credit card provider contact you?

An authorised financial services provider can call you between the hours of 9am-9pm Monday to Saturday (excluding bank holidays and public holidays), unless you ask to be contacted. However, your credit card provider can ring you outside these hours (including on a Sunday) if they have a legitimate reason to believe that a fraudulent transaction has taken place on your card. If they call you outside regular working hours to check this with you, they can only discuss this matter and cannot discuss other general service issues.

Last updated on 16 September 2021