The Supreme Court has just issued a ruling in which it establishes for the first time what usury is in the controversial revolving credit cards. His decision, as recognized by the court itself, serves to establish doctrine in view of the fact that there was no “legal criteria” in this regard and that “mass litigation” was taking place that required principles that served as the basis for resolutions. that they be dictated

These are some of the key questions after knowing the sentence.

They are a complex credit product issued not only by traditional banks, but also by distribution chains, department stores or financial firms. The card works as a line of credit in which, when paying, a loan is contracted that is repaid little by little, often in a large number of low installments with very high interest.

According to the latest data available from the Bank of Spain, in December revolving loans had an average interest rate of 17.99%, much higher than a consumer loan, which is repaid at 7.13%. A debt of 1,000 euros, according to the association of banking users Asufin, can take almost five years to pay off if a very low fee is established, of about 25 euros per month. Interest would be at almost 470 euros at the end of the period. There are cards that are marketed with limits of 5,000 euros, so the effort is much greater.

The plenary of the first chamber of the Supreme Court has set the threshold of abuse in these credits: six points of difference with respect to the average of this same type of loan in the market.

He has done so with regard to a Barclays Bank revolving from 2004 with an interest rate of 23.9% APR, which he has not considered usurious after applying this differential.

His decision corrects another from a lower instance, which compared the interests of revolving with those of consumer loans and which, given the large difference, did consider the existence of an abuse.

It evolves month by month, but according to the data from December, when the market marked an average of 17.99%, a revolving card would be usurious with an interest higher than 23.99%, this is, six points of difference with respect to the percentage reference.

It is the first time that the high court clearly establishes what usury is. Until now, each instance applied its criteria, often with great discrepancies. Some of them had opted for the French system, which is very clear and simple: usury is when the interest on the loan exceeds the market average for similar products by 33%.

Yes, although some of them have been applying percentages that fall within the new usury criteria. The disputes, had all the revolving been annulled, could have reached a value of billions of euros. The Spanish Banking Association (AEB) considers that the ruling does not question the validity of the revolving, which is subject to greater uncertainty due to the greater difficulties for recovery in the event of default. Sources from the association of credit institutions Asnef consider that it is “a final point” and that the ruling ends “many years of regulatory uncertainty.”

For financial institutions, the matter is a resolved case. Some take the opportunity to criticize the “litigation industry” created around revolving.

However, not everyone sees it that way. Almudena Velázquez, in99’s corporate legal director, believes that she is still split. “Whoever contracted this type of credit still has a way to claim the interest paid in excess, and even see themselves free of debt: the lack of transparency, as happened with the famous floor clause or multi-currency mortgages, where the economic consequences were not reported. Neither was it explained here, nor is it understood in the contract, what the revolving method consists of in credit”.

From Asnef they clarify that the sentence has nothing to do with the nature of each firm, whether they are more or less regulated. Usury operates in all areas and it is also possible to denounce entities that lend money quickly and without conditions to people in difficulties if interest rates are six points higher than the market average.

As a principle, avoid revolving cards at all costs. A consumer or personal loan is always the best option. If there is already a contracted loan, it is always convenient to go to the associations specialized in consumer protection.