Credit and charge cards are referred to collectively as credit cards in Luxembourg.
Most so-called credit cards issued in the region function like charge cards, in that payments for purchases are due when billed and cannot be spread over several months or years. Both Visa and Mastercard are generally available through your bank in conjunction with your current account. American Express and Diners Club are also popular, although these cards are issued directly by the respective companies.
A credit card normally costs around €20 to €50 per year, depending on the type of card and the level of service you choose (gold, platinum, etc.). With some cards, travel or other forms of insurance are included in your annual fee. When you register for a card, you’re required to indicate the bank account you wish to use to pay your monthly balance, and the contract includes a standing order authorisation to permit the card company to debit payments automatically from your account. You’ll receive a monthly statement around ten days before the date that the amount due is to be debited from your account, so you have an opportunity to dispute any incorrect charges.
Before obtaining a credit or charge card, compare the costs and benefits. Like your bank account and other forms of subscription and contract, a credit card requires you to give written notification at least a month or two in advance of the expiry date if you wish to cancel it and avoid paying the next annual fee.
If you maintain a bank account abroad, it’s wise to retain your foreign credit cards. One of the advantages of using a credit card issued abroad is that your bill is usually payable up to six weeks after a transaction, thereby giving you interest-free credit – except when cards are used to obtain cash, when interest starts immediately. You may, however, find it more convenient and cheaper to be billed in euros rather than a foreign currency, e.g. US$ or sterling, when payments may vary with the exchange rate. Some banks charge a foreign transaction fee of from 1 to 2 per cent on all credit card transactions originating outside the country, irrespective of whether there was a currency exchange involved.
If you lose a credit card (or other type of bank card) or discover that someone is making fraudulent purchases with it, you should report the situation immediately to the card company, as you can be held responsible for all charges made on the card until you report the loss. Your bank will give you a 24-hour telephone number for reporting losses. Some card issuers charge the card holder for a loss (€10 to €20) not involving theft or fraud, although it may be possible to insure against losing a credit card or to pay a fee to the card company, relieving you of any liability. You should also file a formal police report about the incident.
Even if you don’t like plastic money and shun any form of credit, credit cards do have their uses, for example, no deposits on hire cars and no pre-paying hotel and other bills. Cards also provide greater safety and security than cash, as well as convenience and flexibility. They’re particularly useful when travelling abroad and essential if you wish to make purchases over the Internet.
This article is an extract from Living and Working in Holland, Belgium & Luxembourg.