Lisbon, April 6, 2025 (Lusa) - Consumers with credit cards from before 2010 are paying more interest than the maximum amounts set by the Bank of Portugal, which according to Deco is aggravating and prolonging many debt situations.

According to the Bank of Portugal (BdP), eight million credit cards were active in December 2024 (the last month available). However, the supervisor has no data on how many of these cards date back to before 2010 and are not bound by the maximum rate regime.

The coordinator of Deco's Financial Protection Office, Natália Nunes, told Lusa that when consumers contact them due to financial difficulties. They analyse the cases, they conclude that one of the most serious problems is that they pay high interest rates on their credit cards, often because they were taken out before the maximum rates regime (which came into force on 1 January 2010).

Deco said that it is common for customers to have a credit card interest rate of more than 30% and shared the example of a consumer who has had a card for more than 15 years with a rate of 31.9% and who contacted the association asking how the bank could charge this interest when, in that period, the Bank of Portugal had set a maximum rate of 19.1%.

This is allowed because the person has a card from before 2010, and the legislation that sets maximum rates does not apply to cards contracted before that date.

"This case illustrates how consumers do not properly recognise this problem. The lack of knowledge about the applicable rates and associated charges increases the cost of credit and prolongs situations of indebtedness," said Natália Nunes.

But even consumers who are aware of this difference face difficulties. This is because, to terminate the old contract, they need to pay in full what they owe (capital, interest and commissions), and the amount that many pay each month is small, prolonging the debt.

Lusa asked the Bank of Portugal about the average interest rate for credit cards in Portugal, and the supervisor replied that between January and December 2024, the average APR (Annual Percentage Rate) for all cards in Portugal was 17.95%.

In 2009, a government decree established that the BdP would set the maximum rates for consumer credit every quarter from 1 January 2010. According to the maximum rates regime, the maximum APR each quarter (the APR corresponds to all the costs inherent in using the card) is the average practised by the market in the previous quarter plus a quarter. In addition to this limit, the maximum rate charged cannot exceed the average APR for all consumer credit agreements plus 50%.

According to the BdP, the maximum rate that can be charged on credit cards during the second quarter of this year is 19.2%.

However, many customers are "stuck" with older credit cards, which generally have higher rates. Even those with credit cards taken out after the regime came into force (2010) are "stuck" with the interest rate set when the credit card was taken out.

For example, if a customer takes out a credit card this month at a rate of 19.2% (i.e., the bank is charging the maximum allowed by the BdP this quarter) and the maximum rate changes (goes down or up) in the future, they will still be tied to the contracted rate for as long as they keep the credit card unless they manage to renegotiate with the bank.

So, if the maximum rate decreases in the next quarter, this new maximum rate will not apply retroactively to contracts already signed but only to new contracts formalised from that moment on.

For Deco, another problem is related to "revolving" credit and the associated costs. This type of credit is granted through a card with a renewal period, and each time the amount used is repaid, the initial "ceiling" becomes available again.

"With this type of credit, consumers are often unaware of the true cost of the financing due to how the debt is automatically renewed," said Natália Nunes, adding that many customers pay monthly amounts that only include interest and commissions, keeping the debt practically unchanged.

She also pointed out many cases of people using a new credit card to pay off another one, "falling into a cycle of indebtedness that is difficult to break".

IM/ADB // ADB.

Lusa