Judicial clash between courts for the cards revolving. The Provincial Courts consider, in general, that a rate higher than 20% in this type of product financiers is usurious. In this way, they are squeezing the bank, since they apply a stricter threshold than the one set by the Supreme Court in 2020 and ratified last year.
The cards revolving They are one of the most controversial financial products in recent years, because they have certain peculiarities that are complex for some clients. modality revolving Allows you to defer and split payments for purchases. However, instead of passing the payment in arrears, as in a traditional credit card, the payment is made in monthly installments that generate interest, usually highwhich are around and exceed 20%.
The high court had determined in its latest rulings of 2022 that in order to decide whether a revolving credit is a user, the normal price of money (understood as the equivalent annual rate, TAE) had to be verified at the time of signing the contract. It also considered that for credits formalized between 1999 and 2009, APR was common They moved in a range between 23% and 26% therefore, rates included in that range were not usurious.
From there, the Provincial Courts have been resolving cases by drops, but, in general, they ignore the line marked by the Supreme Court. Some courts, instead of taking the TAE as a reference, take into account the TEDR (effective rate restricted definition) and others the TIN (nominal interest rate), which reflect lower rates. Likewise, they generally estimate that a rate higher than 20% is usurious.
Regarding this matter, the entities have recently received a endorsement by the Bank of Spain. The supervisor has clarified in the tables that he publishes monthly on the interest rates applied by banks that the TEDR index does not reflect the real cost for the client. “The purpose of the TEDR rates is basically to provide the Eurosystem with relevant information for the analysis of the transmission of monetary policy, but they are not, unlike the TAE rates, an adequate or comparable reference of the total cost for financing clients granted”, details the Bank of Spain.
In this sense, the defenses of the banks have celebrated this clarification from the supervisor, since they consider that the judges will begin to take into account the TAE and it will increase the probabilities of rulings favorable to their interests. In fact, they point out that the most reasonable thing is for the High Court to also refer to this new paragraph of the Bank of Spain in its future resolutions to clear up the doubts that have been appearing in this regard, especially in the last two years.
Beyond the index to take into account, there are more discrepancies in the sentences. Each Provincial Court is adopting a different criterion when determining what is considered an interest rate “significantly higher than normal money and manifestly disproportionate”, to which the Supreme Court refers to to consider usury. Thus, some courts consider that a revolving credit is excessive when it exceeds the average rate by 2 percentage points, others when it exceeds 4.5 points and others when it is 5 points higher.
Both the courts and the entities, lawyers and bank clients are in suspense before a new pronouncement of the Supreme to establish jurisprudence and determine when an APR is disproportionate and can be considered usurious. In fact, some judges claim that it is the legislator who establishes a clear criterion on usury, as occurs in some neighboring countries. The legal sources consulted await a quick pronouncement from the high court. In Portugal it is currently at a differential over the average rate of 25%; Denmark 35%; Germany higher than 12 points; Italy 25% plus 4 points; Sweden 40%.
This is a key decision for banks, since in recent years they have received an avalanche of claims for this reason. Statistics from the Bank of Spain show that complaints related to revolving have multiplied by 50 in recent years, going from 204 in 2018 to 10,132 in 2021 (latest data available). According to data from the supervisor, the bank accumulates an outstanding balance of 11,400 million euros in revolving credit, for which reason it faces million-dollar lawsuits in this case.
In fact, financial sources affected by the recent rulings of the Provincial Courts assure that they will appeal the latest sentences that go against their interests.
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