The plenary of the first chamber of the Supreme Court has established for the first time a criterion to determine what is usury in the controversial ‘revolving’ bank cards, in which the user contracts a loan when carrying out operations, generally at rates that are around 20 %. The court has made this decision because until now there was no “legal criterion” about when the abuse occurs and because there are “predictability requirements” in the face of the “mass litigation” that this product has generated.
His decision is that usury begins when the interest applied exceeds the average market rate for credit cards by six percentage points according to the data published monthly by the Bank of Spain. In the case analysed, the client had contracted a revolving card at 23.9% APR at a time, in 2004, when the average loan was 20%, with which his complaint remains unheeded.
After setting the criteria, the Supreme Court dismissed, within this same case, an appeal filed against a judgment of the Provincial Court in which the financial entity was right and a loan linked to a credit card was not considered usurious. Visa credit issued by Barclays Bank at 23.9% APR. The entity assigned the credit to the firm Estrella Receivable, which was the one that sued the client and initiated the litigation.
At first, a court of first instance considered the loan usurious because it far exceeded that of consumer credit. However, the Provincial Court rejected this criterion because a consumer loan is not the same as a bank card loan: while the former have stood between 6% and 8% on average in the last ten years, those of the cards have fluctuated between 17% and 22%. The Supreme Court accepts this argument and considers that the agreed interest is not “significantly higher.”
If the 23.9% applied in the case analyzed by the court is not usury in view of the interests of 2004, it would not be now either. The statistics of the Bank of Spain show that in December 2022 the average rate for these operations with ‘revolving’ cards stood at 17.99%, so that usury would currently start six points above, precisely from the 23.99%.
An average consumer would do better today to avoid the ‘revolving’ card and apply for a consumer loan, which in December reached an average rate of 7.13%. The difference with respect to the ‘revolving’ is one of the reasons that in recent years has encouraged many consumers, law firms and platforms to litigate against banks for this product.
From the Spanish Banking Association (AEB) they do not enter to assess the sentence known today, but they do remember their official position in this regard, according to which the judicial pronouncements do not question the validity of these commercial products, which are different from traditional financing to the consumption and are subject to greater uncertainty due to the greater difficulties for recovery in the event of non-payment.
In the middle of last year, the Supreme Court already took an important step by establishing, in the analysis of a 2006 lawsuit, that the criterion for setting usury should not be in any case consumer loans, but those associated with credit cards. credit. In today’s sentence, he refines the criteria to establish the six points of difference with respect to the market average as the usury threshold.
