The Supreme Court has issued a ruling indicating that interest rates which are higher than 20% for deferred payment on revolving credit cards constitutes usury.

This interest rate on revolving credit cards is considered by the Supreme Court to be disproportionate. The rate reaches 27% on occasion, and this is far and above what may be considered the normal interest rate for money.

The normal interest rate is determined by reference to the statistics published by the Bank of Spain to prepare the weighted average rate of consumer credit operations.

With this type of card, the client returns what has been loaned in small, easy instalments on a monthly basis. However, despite these monthly instalment payments by the client, the debt on his/her card continues to grow. This is because the amount paid as a monthly instalment is less than the monthly interest generated by the loan and so the debt becomes progressively bigger and bigger and effectively never-ending.

The judgement handed down by the Supreme Court refers to a WiZink client, and there is talk of disproportion for applying an interest of 27% APR.

The judgment issued will establish current jurisprudence and will affect thousands of clients. Consequently, since the interest rate on revolving credit card contracts is legally considered to be usury, this entails declaring null and void thousands of said contracts. This is a severe setback for banks that have loans linked to revolving credit cards which are worth almost 14,000 million euros.

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