The ongoing legal battle over revolving credit cards remains unsettled. Even though the banks’ arguments found some support in a Supreme Court ruling, lawsuits accusing banks of usury and lack of transparency continue to be filed. Arriaga Partners, a law firm active in challenging banking practices, announced this week that it will persist in suing banks and revolving card issuers for transparency and usury, arguing that the most recent Supreme Court decision does not resolve concerns about how these cards are marketed and disclosed to consumers. The core claim is that revolving cards are marketed without sufficient clarity about their terms and costs.
The Supreme Court ruling defined a revolving payment card as usury if the interest charged ever exceeds the average rate for these products by more than six percentage points. In February, a separate set of resolutions addressed the usury nature of a mortgage loan when the lender was not a traditional credit institution. The initial case cited involved a client who opened a Visa revolving credit card with Barclays Bank in May 2004, bearing an interest rate of 23.9% APR.
According to Arriaga’s experts, Spanish law requires financial institutions to provide customers with all information necessary to understand the card’s terms. They argue that the Court’s decision does not shift the defense strategy for Arriaga’s clients, who may continue to challenge the contracts due to information gaps and perceived lack of transparency in the financial conditions under which financing is obtained. They maintain that many contracts are marked by a lack of transparency, and these arguments have historically found support in other banking disputes, such as foreign currency mortgages, where judges have favored consumer recalculation of loans in euros.
Associated costs and the mechanics of compound interest
One key point highlighted by Arriaga’s lawyers is that judges often consider only the theoretical economic burden of the card itself, neglecting the real burden when accounting for the annual interest rate, the fees and commissions tied to payment protection insurance for customers, ATM cash statuses, late payment penalties, and other related charges. This perspective suggests that a true picture of the financial impact requires looking beyond the headline rate to understand all ongoing costs associated with using revolving credit.
Although the Supreme Court decision was a setback for lending institutions, it has not closed the door on further examination of the true economic burden of these contracts. Arriaga representatives say there is room to probe additional components and to demonstrate that the economic load can be misleading when viewed in isolation. They describe the current ruling as an opening rather than a verdict definitive on all aspects of these products.
The decision sparked criticism among plaintiffs, with some noting the degree of disagreement about whether the standards for identifying usury were applied fairly. Consumer advocacy groups have warned that revolving cards remain a risky financing option for many households, especially during periods of elevated interest rates. These concerns have gained renewed attention as families face tighter credit conditions and higher costs of living.
Understanding the all-in cost
According to Asufin, the leading foreign consumer finance watchdog cited by Arriaga, many revolving cards advertise APRs that do not reflect the total cost to the consumer. They argue that commissions, optional payment protection insurance, and the compounding of interest can produce a far larger debt than the nominal rate suggests. In practice, failing to meet a payment can trigger default interest and penalties, and the overall debt can grow through compound interest. This mechanism, they say, often means the debt amortization built into these cards functions as a disproportionate and usurious source of cost for the borrower.
In real-world terms, non-payment or late payments do not just incur penalties; they can set in motion a cycle where interest accrues at higher rates, fees accumulate, and the consumer faces a mounting balance that is difficult to escape. The combination of nominal APR, insurance costs, and the practice of compounding interest can make revolving cards particularly challenging for families, especially when rates rise or remain elevated over time. The ongoing dialogue about transparency aims to ensure that consumers fully understand the true price of ongoing credit and can make informed decisions about whether revolving cards are the best fit for their finances.