Revolving cards and expensive debt
A revolving card is a credit card with a dangerous twist: instead of paying everything you spent at the end of the month, you repay in instalments through a payment you choose, usually low. It sounds convenient. For many people it is a trap.
How it works (and why it hooks you)
With a normal "pay at month-end" credit card, you spend and the following month you pay the full amount with no interest. With a revolving card, you choose to pay a fixed instalment (say €30/month) or a small percentage of the debt. What you don't pay stays outstanding and generates very high interest.
The credit is revolving: as you pay, you get available credit to spend again, so the outstanding balance almost never goes down.
The problem: a very high rate + a low payment
Two ingredients do the damage:
- A very high nominal rate: these cards usually run around 18-26 %, far more than a mortgage or a personal loan.
- A low payment: if the payment barely covers the interest, the principal drops extremely slowly. You can pay for years and still owe almost the same.
Numerical example
You owe €2,000 on a revolving card at 24 % and pay €50/month:
| Item | Approx. result |
|---|---|
| First month's interest | ~€40 |
| Principal repaid in month 1 | ~€10 |
| Time to clear it | ~81 months (almost 7 years) |
| Total interest paid | ~€2,060 |
For €2,000 of purchases you end up paying just over €4,000. The "comfortable" payment is exactly what blows up the cost.
Is it legal? Usury and the Supreme Court's criterion
In Spain there is no fixed percentage above which a card is automatically illegal. The Usury Law and Supreme Court case law establish that interest is usurious when it is "notably higher than the normal price of money" and disproportionate. To judge it, the courts compare the card's rate with the average rate of revolving cards published by the Bank of Spain. It is not a fixed threshold: it depends on the case and that average reference rate. Many contracts have been voided as usurious, but not all.
How to get out (and avoid it)
- Pay more than the minimum: every extra euro goes almost entirely to principal.
- Consolidate or replace the debt with a personal loan at a much lower rate; that drastically cuts the interest.
- Switch the payment mode to "pay in full at month-end" (no interest) if the issuer allows it.
- Review the contract: if you suspect usury or lack of transparency, consult a professional.
Warning signs in your contract
- The payment mode is pre-set to "deferred payment" or "fixed instalment", not pay-in-full at month-end.
- On the statement, the outstanding principal barely drops month to month even though you pay.
- You are offered to raise the limit or "defer" big purchases with one click.
- The contract's real APR (not the marketing hook) sits well above the average revolving rate published by the Bank of Spain.
If several ring true, clear this debt before any investment: no fund reliably earns you the 24 % the card costs you. Switch the payment mode to month-end, move the balance to a cheap personal loan and, if you suspect usury, keep the statements and consult a professional.
This is educational information, not financial or legal advice.