The Supreme Court agrees with the banks in the case of revolving cards. The Civil Chamber has dismissed the appeal filed against a previous ruling that declared the remunerative interest agreed in a revolving contract not usurious.
As reported by the High Court, the appellant signed a revolving Visa credit card contract on May 3, 2004, with the entity Barclays Bank and with a remunerative interest rate of 23.9% APR. The financial institution assigned its credit to Estrella Receivable and the latter sued the cardholder claiming the amount owed.
The Court of First Instance dismissed the claim and declared the usurious nature of the agreed interest because it was notably higher than the average interest on consumer loans. The Provincial Court upheld the appeal in part. It rejected the suitability of the average rates of consumer loans to make the comparison as it is a credit card, and considered it proven that the usual interest in this type of contract in 2012 was 20.90% or higher. It did not consider the remunerative interest to be usurious because it was not notoriously higher than that normally agreed and discounted some amounts for commissions for claims of unpaid installments.
The defendant filed an appeal for cassation and the Supreme Court has dismissed it, agreeing with the bank.
The judgment of the Civil Chamber reiterates that the index that must be taken into consideration to determine if the agreed interest is notably higher than normal is the equivalent annual rate (TAE) and that the comparison must be made with the average interest applicable in the moment of contracting to the category that corresponds to the questioned operation. For contracts signed after the Bank of Spain statistical bulletin broke down the type of revolving credit (June 2010), the comparison parameter is the average interest rate published at each time.
The Chamber notes that the interest rate analyzed by the Bank of Spain in the statistical bulletin is the TEDR (effective rate of restricted definition) which is equivalent to the APR without commissions. For this reason, the published interest is slightly lower than the APR and can be supplemented with the commissions generally applied by financial institutions. This difference ordinarily will not be very decisive to assess usury because the agreed interest is required to be significantly higher than the normal market rate, it is not enough that it is merely higher.
The purpose of the appeal focuses on determining what was the normal market interest rate for revolving card contracts in 2004, a time when there were no detailed statistics from the Bank of Spain. In this sense, the Chamber resolves that in order to identify the normal market interest for the revolving cards contracted in the first decade of this century, as a general rule, the specific information closest in time must be used, which is the itemized by the Bank of Spain in 2010. Likewise, the magistrates establish that in the absence of a legal criterion on the acceptable upper margin to avoid incurring in usury, given the requirements of predictability in a context of mass litigation, the court establishes the following criterion : in credit card contracts in the revolving modality, in which up to now the average interest has been above 15%, the interest is notably higher if the difference between the average market rate and the agreed rate exceeds 6 percentage points.
In the specific case, the average rate at the time of contracting was slightly higher than 20% and the agreed interest (23.9% APR) does not exceed 6 points, so it is not considered notably higher nor is it usurious. The Chamber dismisses the appeal.
According to the criteria of The Trust Project
