Transparency in ‘revolving’ cards: the position of the Supreme Court
The conflict between revolving card entities and the Supreme Court has been intense, but has given rise to a new doctrine that establishes the limits of this financial product. In the article, we give you more details.
What problems have there been with the revolving cards?
Revolving cards are financial products that work like a loan. Basically, they consist of a card that has an available balance that you can, or not, use. In case you use it, you have to return that amount at once or in installments and interest will be applied, which, if they are late, can be high.
When you hire a revolving card, you have to sign a contract with the company or financial institution with clear conditions. However, there are two problems here: the clarity of the conditions is sometimes not so much and, in addition, even if these conditions are clear, they cannot contravene the Law on Usury in force in Spain.
Many freelancers or small businesses hire revolving cards for certain expenses. The problem is, especially in the self-employed, that the regulations can be confusing and that, unlike what happens with debit or credit cards, this system works differently. And for a matter of expense control it is essential to know what the lender can and cannot do.
There have been numerous court rulings and, in 2025, the Supreme Court has already established a doctrine. With this, the interest to be paid could be considered null and void. It’s good that you know the updates.
Revolving cards and Supreme Court: the doctrine in 2025
The conflict between revolving card entities and the Supreme Court (TS) is based on voluntariness. Not in vain, it is considered that a private contract between two people with full capacity to act is binding. However, the TS indicates that, in some cases, either that consent is flawed or is manifestly illegal. And for that, consent has to be real. These are the criteria in which the payment of interest on a loan of these characteristics could be cancelled:
1. Lack of transparency due to intelligibility
In the revolving card contract, it must be clear that there is talk of an indefinite loan. Likewise, the “capital recomposition” mechanism (i.e. what needs to be returned) must be included with “precise and intelligible” criteria. That is, the client must fully understand what he is signing and the consequences of it, including anatocism, that more interests are added to the interests. In the event that it is considered that this condition has not been met, the contract will be considered null and void.
Obviously, here is an element of subjectivity. For that, the bank or in charge of granting the loan, in case of doubt, must do an adequacy test. If this has not been done in a timely manner, a lack of transparency could be alleged.
2. Lack of transparency and abusive interests
The legislation on usury also includes what are considered abusive interests. And, in this case, the lack of transparency can also give rise to manifestly abusive interests. Revolving cards are complex financial products, but, in addition, they can exceed (and frequently exceed) the usual interest rates. For example, if a customer becomes a “captive debotor” it could be considered, following what the Law on Usury says, which indicates as null any loan with an “interest significantly higher than the normal of money and manifestly disproportionate.”
This point is directly related to the previous one. Anatocism is legal, yes, but provided that it has been clarified what happens in case of deferring payment. The problem is that in many cases this information has either not been given, or has been given partially. Hence the arrival of abusive interests. Therefore, the lack of transparency can perfectly generate interests well above normal, and in theory they would be legal if they were not the initials.
For this, we must remember that there has been a doctrine, for years, that establishes that a significantly higher interest is considered one that exceeds 25% APR with respect to the capital that must be amortised. Obviously, this amount will vary depending on the market and interest rates, but it must be taken as a reference.
Consult specialists!
Knowing how revolving cards work and the Supreme Court will help you know if you are interested in hiring them or not. At the Orihuela Costa Advisory we provide a comprehensive management and advisory service for companies and freelancers. Call us without obligation and we will help you!
