THE SUPREME DECLARES USER AND VOID THE INTEREST OF A WIZINK BANK REVOLVING CARD

25/06/2020

The Plenary Session of the 1st Chamber of the Supreme Court has dismissed the appeal filed by Wizink Bank against a ruling that had declared the nullity of a revolving credit contract through the use of a card because the remunerative interest, initially set on the 26th, was considered by the user. 82% APR and that it had stood at 27.24% on the date of filing the claim. 

In the case, the control of the stipulation that sets the remunerative interest could also have been carried out through the controls of incorporation and transparency, typical of the control of the general conditions in contracts entered into with consumers; however, in this case the plaintiff only requested the annulment of the credit operation due to its usurious nature, that is, based on the Law for the Repression of Usury of 1908. 

20% is already a high interest 

The Plenary of the Chamber considers, firstly, that the reference of the "normal interest of money" that must be used to determine if the remunerative interest is usurious must be the average interest applicable to the category to which the questioned operation corresponds, in this case the average rate applied to credit operations through credit cards and revolving published in the official statistics of the Bank of Spain. 

Secondly, when determining when the interest on a revolving credit is usurious, the Chamber takes into account that the average rate used to make the comparison, somewhat higher than 20% per year, is already very high.

For this reason, a difference as appreciable as the one that occurs in this case, in which the interest rate set in the contract greatly exceeds the index taken as a reference, must be considered as significantly higher than said index. The concurrent circumstances in this type of credit operations must also be taken into account, such as the public to which they are usually intended, individuals who cannot access other less burdensome credits, and the peculiarities of revolving credit, in which the limit of the credit is constantly being recomposed, the accrued interests and commissions are capitalized to accrue the remunerative interest and the amounts of the installments are not usually very high, in comparison with the outstanding debt, but they lengthen the time during which the borrower continues to paying the installments, to the point that it can make you a "captive" debtor. 

Lastly, the Chamber reasons that fixing an interest rate notably higher than normal for money cannot be justified due to the risk derived from the high level of defaults linked to credit operations granted in an agile manner, because the irresponsible granting of consumer loans at interest rates interest rates much higher than normal, which facilitates consumer over-indebtedness, cannot be protected by the legal system.

THE FAILURE INTERPRETS THAT THE MEAN IS THE UPPER LIMIT 

Legal uncertainty. The Supreme Court ruling is not actually an amendment to all card credits. It indicates that the average interest rate for this product provided by the Bank of Spain should be used, corresponding to 19.64% in January. This represents a change with respect to the 2015 sentence, which established to establish as a "usurary" that exceeded double the interest of consumer prices, now at 7.31%. But, at the same time, it does not establish a fixed criterion to understand what can be considered "significantly superior" to the market reference. This will trigger litigation. Hence, the bank now proposes that the Government regulate and give legal certainty to the product. In Portugal, where WiZink operates, since 2009 interest rates for cards (now at 15.7%) and other credits are set by the regulator.