Spain moves to tackle credit cards that can keep people in debt for years

It often starts with something fairly ordinary. A broken washing machine. An unexpected car repair. A flight that seems too good to miss.

The salesperson mentions that you can spread the cost over monthly payments. The amount looks affordable. You sign up, make the purchase and move on with your life.

Months later, you’re still paying. Sometimes years later.

Despite making regular payments, the debt seems to shrink at a frustratingly slow pace.

That experience is one of the reasons revolving credit cards have become such a controversial financial product in Spain. Now the government has decided that the way these cards are advertised needs to change.

New measures published in the Official State Gazette (BOE) introduce stricter requirements for lenders promoting revolving credit products. The changes follow recent Supreme Court rulings and are intended to give consumers clearer information before they take on this type of debt.

The move comes after years of complaints from borrowers who say they never fully understood how expensive these cards could become.

Why revolving credit cards have caused so much controversy

At first glance, a revolving credit card can look similar to any other credit card.

You make a purchase and repay the money over time. The difference lies in how the debt is repaid.

Instead of clearing the balance at the end of the month, cardholders make fixed monthly payments while interest continues to accumulate on what remains outstanding.

The monthly amount can look reassuringly low and that’s often what attracts people in the first place.

The problem is that low monthly payments can mean a large part of each instalment goes towards interest rather than reducing the original debt.

As a result, people can spend a surprisingly long time paying off relatively modest purchases.

Consumer organisations have been warning about this issue for years. The products themselves are legal, but critics argue that many borrowers focus on the monthly payment and not on how much the borrowing could ultimately cost.

Interest rates are frequently cited as one of the biggest concerns.

According to the information referenced by the government, revolving credit cards often carry annual percentage rates of between 20 and 30 per cent.

For comparison, that is considerably higher than many traditional forms of consumer credit. That doesn’t automatically mean every revolving card holder will face financial difficulties.

Some people use these products responsibly and repay balances quickly.

The concern is what happens when consumers do not fully understand how the repayment system works.

What will change under the new rules

The government’s latest measures focus heavily on advertising and transparency.

Financial institutions will now be required to ensure that advertising for revolving credit products is clear, objective, sufficient and not misleading.

Promotional material must also make it obvious that it is advertising.

That may sound straightforward, but authorities believe clearer information could help consumers make better informed decisions before taking on debt.

The reforms also aim to improve how lenders assess potential borrowers.

Banks and financial institutions will face stronger expectations when evaluating whether a customer can realistically afford the credit being offered.

The changes were introduced following recent Supreme Court decisions that placed renewed attention on transparency and consumer understanding in revolving credit agreements.

While the rules do not ban these cards, they do place greater emphasis on ensuring consumers know what they are signing up for.

What borrowers should look at before signing up

For consumers, the most important figure is often not the monthly payment. It’s the total amount that will eventually be repaid.

A monthly instalment of €30 or €40 can appear manageable, particularly during periods of financial pressure. Yet if the interest rate is high and the repayment period stretches over several years, the final cost can be much greater than expected.

That is why consumer groups regularly advise borrowers to look beyond the headline monthly figure.

Questions such as how much interest is being charged, how long repayment will take and how much the purchase will ultimately cost can be just as important as whether the monthly payment fits the household budget.

The government’s latest intervention suggests Spanish authorities believe consumers need clearer answers to those questions before agreeing to this type of credit.

For lenders, that means stricter advertising standards and for borrowers, it means more information and hopefully fewer unpleasant surprises.

Because when it comes to revolving credit, the monthly payment is often the first thing people notice. The total cost is usually the figure they remember later.