Spain's Supreme Court considers WiZink revolving credit card credit usurious

Spain's Supreme Court on Wednesday said it considered usurious and null an annual 27% rate applied to a revolving credit card by online bank WiZink as it was above the normal cost of credit. In a much-awaited ruling, the court therefore rejected an appeal by WiZink against a regional court ruling on the case of a woman from Santander over a "Visa City Oro" card issued in 2012 with an annual interest rate of 26.82%.

This revolving credit card, which allows customers to continuously borrow up to certain limits depending on purchases and payments, was originally issued by Citibank Spain but now belongs to online lender WiZink, who declined to comment. Though the Supreme Court ruled specifically on this case, the ruling could have wider implications for Spanish lenders by setting guidelines for the rest of the sector.

"Setting a significantly higher than normal rate of interest on money cannot be justified by the risk arising from the high level of defaults linked to consumer credit operations granted in a swift manner," the court said in its ruling. Ultra low rates have pushed Spanish banks to seek returns from more profitable business lines such as consumer credit.

As of end 2019, Spanish banks had an outstanding exposure to revolving credit transactions of 13.6 billion euros, Bank of Spain data showed. But high rates on these increasingly popular cards, which allow periodic payments and automatically renew credit lines, have sparked a wave of lawsuits from debt-laden borrowers.

Two lower courts had already ruled the rate represents usury, prompting WiZink to appeal before the Supreme Court. Shares in Bankinter were down 1.2% at 1250 GMT, turning negative after news of the ruling came out. (Reporting By Jesús Aguado Editing by Ingrid Melander)