Austria is traditionally seen as a country where cash is king, but with the advent of online shopping, and accelerated by the Covid-19 pandemic, credit cards and debit cards have become increasingly widely accepted, even for smaller/micro-payments. Many debit card providers have also switched from Maestro and Cirrus to a MasterCard or Visa debit, offering a debit card that is accepted for online payments like a credit card.
If you have had a credit card in the UK, you may be forgiven for presuming that Austrian credit cards work in the same way as British ones. However, there are quick a few differences worth knowing about to get the most out of your credit card.
When is a credit card, not a credit card?
Austrian credit cards are really charge cards by default. That is to say that if you use your credit card, when you get your credit card bill at the end of the month (the billing cycle usually ties in with the calendar month), the default payment option is to pay off the entire outstanding balance in full. There is no “minimum payment” option, as is so popular in the UK, where you typically pay off a minimum of 2-4% of the balance of the credit card per month.
This has the effect that the interest rate (APR/AER – see the links at the bottom for further information) of the card becomes less important, since you pay the balance off in full. It is possible to arrange to not pay back the full amount, but credit card providers will frequently in this case ask for substantially more than a handful of percent of the balance.
What is the typical billing cycle of an Austrian credit card?
Typically the billing cycle is by calendar month, meaning that all payments by credit card during a calendar month are covered on a single credit card bill, although some providers bill from a certain date of the month until the corresponding date on the following month. From the date of the bill, there is typically 10-15 days until the amount is taken out of the reference account (typically the current account your salary is paid into) to which the card is attached. Credit card bills will state:
- The date of the bill/statement
- The date of the next bill/statement
- The date on which the balance will be debited from the reference account
How can I optimise my spending on an Austrian credit card?
Given the approximately monthly frequency of bills, and the 10-15 days being the bill being issued and the credit card balance being debited from your reference account, you have approximately six weeks “credit”. If you make a purchase on the day you receive your credit card bill, you will then only actually pay for it around a month and a half later. If you are paid 14 times a year (e.g. 13th month in May and 14th month in November (sometimes also known as Urlaubsgeld/Weihnachtsgeld)) then large purchases made in April and October could be absorbed by your double salary payments.
Similarly when setting up your credit card account, ask whether there is a possibility to have the cycle to run from a certain date in the month, to time it so that the payment goes out just after you are paid monthly. If you are paid weekly, and your bank offers you free sub-accounts (Subkonten), it can be a good idea to set up a Subkonto with a fixed amount going into the Subkonto weekly after payday and the money being transferred back into the main account just before the credit card payment is made (of course this works best if your credit card spending habits are fairly constant).
What hidden costs may arise?
Some credit cards allow cash advances (using the card like a debit card to withdraw cash) free of charge, while others will charge a fee for doing so. Where the fees are in the form of interest, the interest may start being charged from the time of the withdrawal, not the end of the billing cycle. So as convenient as it might be to use a credit card like a cash card, it can become expensive, particularly if you withdraw small amounts of cash frequently. Purchases in other currencies might also be subject to handling charges, or are vulnerable to fluctuations in exchange rates.
Do free credit cards exist in Austria?
Some credit cards are offered for “free” but might be subject to your holding an account with the bank, with a certain amount of money flowing through or a certain balance being maintained in the account (this is why credit cards in Austria are usually attached to your current account).
Are there any free extras on credit cards?
How free they really are depends on the annual fee for the credit card. Some providers offer points every time you use your card (like loyalty cards) that can then be redeemed for rewards. Beware that the points that are not redeemed within a certain time may be lost. Others allow the collection of frequent flyer points/miles, and may also guarantee that your miles won’t expire or that your frequent flyer status tier is maintained even if you are not flying as regularly as you once were.
Some cards might offer courtesy airport lounge access, although this might be offset by a higher annual fee for the card. Others might offer discounts on refuelling at specific petrol stations.
Some credit cards offer purchase insurance and travel insurance, although it is worth checking what they actually cover and what they don’t. Such travel insurance is not as a rule recognised for visa applications. There might also be conditions attached to travel insurance coverage like the fact that the travel must have been paid with using that card.
This Financial Bootcamp page was originally inspired by an article that appeared in The Guardian on 4 September 2021. It is part of British in Austria’s “The Guide – Financial Bootcamp”, a series of pages intended to provide information about financial housekeeping. If you have enjoyed it, or wish to comment on it, please use our “Financial Bootcamp” forum.