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A credit card is a consumer credit agreement where the cardholder is a natural person with no commercial or professional purpose. The credit card is also a means of payment.
In a credit card agreement, the credit institution provides a maximum credit limit that can be used – the ceiling.
The credit granted through the card is considered as revolving credit because as the customer pays the amounts previously used, the ceilling is once again available for re-use.
A credit card can be used to make payments for goods and services and often withdraw money (cash advance).
When the card is used, customers receive a credit, which is repaid on the date and under the conditions agreed with the institution issuing the card.
Transactions are not immediately reflected in a current account, but in a card account.
Credit card agreements are usually:
Automatically renewed or of indefinite duration;
Entered into at a fixed interest rate;
Entered into without the credit institution requiring specific guarantees from the customer.
Credit cards can be:
Of universal use – can be used to make purchases in stores and on the internet and withdraw money on credit (cash advance);
Private – can only be used to make purchases in a certain store or a set of stores, with the aim of gaining customer loyalty.
Prior to the conclusion of the agreement, the issuing institution must provide the customer with the standardised information sheet (SIS) and the general conditions of use of the credit card.
Every month, the credit institution must issue a statement with the amount of credit used and the date of payment.
The costs associated with the credit card agreement may include:
Interest, according to the agreed repayment modality;
Annual card fee;
Fees related to cash advance – payment of a fixed amount per withdrawal and a percentage of the amount withdrawn;
Fees on the use of the card abroad;
Interest on late payment and fees for recovering amounts owed in the event of late payment.
All costs associated with the use of the credit card must be included in the institution’s price list.
The annual percentage rate of charge of credit cards is limited by the maximum rates fixed quarterly by Banco de Portugal.
Credit cards are usually a more expensive form of financing; other forms of credit have lower interest rates depending on the purpose.
Decree-Law No. 133/2009 (only in Portuguese)
Consumer credit – How to enter into a consumer credit agreement
Consumer credit – Cap rates
Services – Price lists
Payments – Cards