Installment payments on Swiss credit cards?

What do Swiss credit card issuers mean by installment payments? I am considering applying for a credit card to finance a vacation but I am a bit confused about the credit part. The card comparisons I looked at use the term installment payments, but there is no mention of carrying balances or minimum payments.

Does that mean the credit I use on a Swiss credit card has to be repaid in installments? Is that the same as minimum card payments or is there actually a schedule of how I need to repay my balance?

I would prefer to just pay off my balance when it best suits me. Can you explain how credit card balances work in Switzerland. Thank you.

Hi there,

In Switzerland, carrying a balance on a credit card works much like it does in other countries. The main difference is that you will not always automatically be able to carry balances past the due date. You may have to apply to activate this option. In other words, your credit card is in fact a charge card (you have to repay in full by the due date) unless you specifically apply to carry balances - after which it becomes an actual credit card.

In some cases, your card comes with the credit option activated from the start and you don't need to activate it. You can ask your bank about this or check if your card statement mentions a minimum payment. If it does, you are already able to carry balances.

When Swiss card issuers mention "installment payments", they are referring to your minimum payment. This payment - usually 5% of the outstanding amount (minimum CHF 50 or CHF 100) plus interest - must be paid by the due date each month. Of course you can repay more than this amount if you want to, and paying more is a good idea because the sooner you repay your debt, the less you will spend on interest charges. The remaining balance is carried over to the next month.

So carrying a balance on a Swiss credit card works much like carrying a credit card balance anywhere else. The term "installment payments" refers to the fact that your minimum payments cover your balance in a series of "intallments". Of course, you may make ongoing purchases which continually increase your balance (within your line of credit), so the term "installment payments" is probably not the most precise word to describe this type of loan.

It is important to note that if you do not pay your credit card bill in full by the due date, Swiss banks will typically charge you interest on the outstanding amount based on the transaction posting date rather than the payment due date. That means you pay interest right from the point at which transactions were made and not from the point at which you carried the balance past the due date.

Personal loans generally provide a cheaper - albeit more complicated - way to access longer-term loans because interest rates are generally lower than those of credit cards. This is especially true if you have good credit.

Best regards from Moneyguru

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