The CJEU confirms the usury of the interest rate on revolving cards, but the final cost continues to skyrocket




The Court of Justice of the European Union (TUE) has endorsed the doctrine of the Supreme Court to annul contracts with «revolving» cards for being declared as «usury» when they exceed a certain interest rate by declaring that this criterion is not contrary to Community rules. In an order dated March 25, the Luxembourg court ruled that the directive on consumer credit contracts "is not opposed to a national regulation that establishes a limitation of the APR that can be imposed on a consumer in order to fight against usury, provided that it does not contravene the harmonized rules on information obligations ”.

The European Justice thus responds to the preliminary ruling sent by the Provincial Court of Las Palmas de Gran Canaria regarding a dispute that confronts Banco Santander with a consumer with whom it agreed to a credit card contract with a limit of 3,000 euros and an APR of 26.82%.

The case had been resolved by a court that in the first instance had declared the contract invalid because the interest rate was "usurious", in accordance with Spanish jurisprudence on the matter. It was based, specifically, on the doctrine of the Supreme Court that declares void those consumer contracts that exceed twice the average Spanish interest rate. Banco Santander appealed this ruling before the Provincial Court of Las Palmas de Gran Canaria, which in turn raised several questions to the TUE before ruling on the matter. In particular, he wonders if the imposition in a Member State of interest rate caps is compatible with a single market and harmonized taking into account that there is no legal limitation at European level.

The European Justice solves the preliminary questions through an order and using previous judgments on similar cases. Thus, it comes to the conclusion that the Supreme Court's jurisprudence to declare usury in revolving card contracts.

The European judges note in particular that the European legislation "contains only minimal harmonization" and "does not prevent the Member States from retaining or adopting more stringent provisions for the protection of consumers". For this reason, it considers that countries "remain competent to set said cost or amount."

Along the same lines, the order recalls that the CJEU had already declared that the directive on consumer credit contracts "does not aim to harmonize the distribution of expenses within the framework of a credit contract" and therefore, 'Member States continue to be competent to provide mechanisms for regulating such expenditure, provided that these are not contrary to the harmonized standards "by said directive.

However, the order adds that when setting these limits, the Member States "must ensure that they do not violate the areas harmonized by these directives, such as information obligations."

"Not recommended for the consumer"

For Patricia Suárez, president of the Asufin association, this sentence “represents another step, taken on this occasion in Europe, which puts these products on the ropes, absolutely discouraged for the consumer as they greatly facilitate entry into a spiral of debt difficult to control and they go against the principle of responsible lending sponsored by the Bank of Spain ”.

Asufin has just published its 'III Revolving Barometer' in which it confirms that the final price is still above 22%. Specifically, and with respect to the month of June, the APR only drops from 22.86 to 22.84%. This is due, above all, to the high emission costs associated with it. Although many cards have continued their adjustment in interest rates (the Wizink Oro Card has gone from 21.94% to 20.90%) or have even been replaced by cheaper plastics (such as Bankia, which has changed the Shopping Card, with 26.08% APR, for the new Flexible Card, at 19% APR), the average APR hardly varies compared to six months ago.

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