The trend towards household indebtedness increases due to inflation and the hangover of the Christmas period. Paid ground for the use of products such as the controversial 'revolving' cards to grow. A financial instrument that allows payments to be made in installments without having money in the checking account in exchange for setting a monthly fee to which interest, commissions and other expenses are applied.
In situations of economic difficulty, "the use of this type of product always increases, mainly due to the fact that they are easily accessible, fast and the banking entities are not required to prove any type of economic solvency to the user," he comments. Estel Romero, lawyer from the Sanahuja Miranda Abogados firm.
One of the main problems with the 'revolving' mechanisms, warns from the Association of Financial Users (Asufin), is that "very high interest rates are usually applied". In this sense, the latest barometer on 'revolving' cards from the association detected that in 2022 this type of financial product became more expensive, since the Equivalent Annual Rate (TAE) - made up of the interest rate, expenses and commissions of the loan- on average stood at 21.5%, one percentage point more than a year ago and 3.5% higher than that of a conventional card.
In addition to assuming a greater outlay for the consumer, these cards induce, comment from Asufin, "to fall into a spiral of debt, since by setting the fee you want to pay, you have the feeling that you can assume it." However, the debt is renewed monthly: it decreases with the payment of installments, but at the same time it increases when the card is used again for payments and withdrawals at ATMs, as well as due to the effect of accumulated interest, commissions and other expenses. .
"This peculiarity has its consequences", they warn from the Bank of Spain Bank Client Portal, since if a low monthly installment is paid with respect to the amount of the debt, the repayment term will be extended, "which can lead to that you have to pay a lot of interest". The particularity of this product, with a debt and installments that vary from month to month, means that "it is not possible to issue a prior amortization schedule (as it does, for example, when you take out a loan)".
Despite the danger it poses to the financial health of users, this product is in high demand by consumers with "trouble making ends meet" due to its wide availability. "Its marketing in commercial establishments is an important factor, since the advertising that is done is 0 interest, and certainly in the acquisition establishment the card does not generate interest, but when using it outside of this establishment, the problems begin," Romero details. .
For all these reasons, it is recommended to read the conditions of the 'revolving' cards well before hiring them. At the same time, financial institutions are required to comply with a series of good banking practices when offering this type of product, which are detailed below:
The hefty interest rates that are usually applied to 'revolving' cards have often made them a source of litigation. Faced with this problem, the Supreme Court (TS) has on several occasions declared the nullity of contracts for this type of financial product. In this sense, the ruling of the High Court of the year 2020 for a card marketed by WiZink with an initial APR of 27.24% is especially notorious. The court described as "usurious" the high interest rates charged for the use of this type of cards, since it considered that they violate the Law of Repression of Usury of 1908.
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