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Why you should be careful if your Spanish bank offers you a ‘revolving’ card

The Bank of Spain is reporting a spike in the number of complaints from bank customers who are being charged sky-high interest for using a particular type of credit card. What is a ‘revolving’ card and do you unknowingly have one?

Published: 17 January 2022 12:37 CET
revolving credit card spain
Spanish banks don't refer to these credit cards as 'revolving' so it isn't always easy to know that you have one until you've been overcharged. Photo: Ahmad Ardity/Pixabay

‘Tarjetas revolving’ are a type of credit card offered by banks in Spain, a complex financial product which is giving many bank customers a nasty surprise.

Spain’s banking system has adopted this anglicism even though the term ‘revolving card’ isn’t really used in English-speaking countries (revolving credit is, as is evergreen loan). 

The ‘revolving’ system allows a bank customer to delay and split payments for purchases they make with their ‘revolving’ credit card. 

However, instead of having to pay the full amount owed at the end of the month as with credit cards, the payment is made in smaller monthly instalments that generate a lot of interest – often 25 percent a month – something thousands of Spaniards are now saying they weren’t told by their banks.

If for example, you used a ‘revolving’ credit card to make a purchase worth €1,000 and your contract states that you need to pay it back in 40 instalments (€25 a month instalments) with 25.6 percent interest for each, by the time those 6 years and 10 months had elapsed you would have paid more in interest – €1,031 – than for the initial payment.

In its roundup of banking complaints in 2020 published in early January 2022, the Bank of Spain reported a 138 percent rise in the number of fraudulent credit card charges compared to the previous year, and 212 percent when it came to revolving cards specifically.

Most disgruntled customers slam the lack of information provided about the consequences of using these cards, which for Spanish legal complaint firm Reclama Por Mi demonstrates the “malpractice” of Spanish banks with these products, adding that 62 percent of the complaints they deal with relate to ‘revolving’ credit cards. 

“Sometimes bank customers have no choice but to continue using the ‘revolving’ cards that they have in order to meet expenses, and by doing so they keep being charged exorbitant interest, which means that the debt is barely paid off,” Director of Operations Javier Moyano told Spanish daily La Información.

To be clear, Spanish financial entities do not refer to these credit cards they offer as ‘revolving’, so you won’t automatically know that you have one. 

In order to know if you have one, you will have to read your contract’s smallprint, pay special attention to the TIN or TAE interest rate (the annual percentage rate in English – APR), the number of instalments and so on. 

In early January, the Bank of Spain ruled that financial entities in the country will have to provide the client with simulations of how much it really costs to obtain this type of credit that generates double-digit interest in most cases.

It follows an earlier decision by Spain’s Supreme Court in 2020 that ruled that Spanish banks could no longer charge more than 27 percent interest on revolving credit card purchases.

But it seems likely that financial entities in Spain will still find ways to get customers to accept this type of credit card without them really knowing what they’re getting themselves into. 

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The safest way to avoid any nasty surprises altogether is by only owning a debit card if that’s financially possible for you, or making sure that you ask your bank manager as soon as you get a new credit card ¿Es una tarjeta de crédito normal o una revolving? (Is it a normal credit card or a revolving one?). 

It may also be that you have a revolving credit card and have only just found out that you’re being charged hefty interest, in which case you should know you can complain to your bank and try to reach an agreement outside of court, or you can claim through the Bank of Spain or through the courts.

According to Spanish law firm Rico Sánchez Abogados, who can help to lodge a complaint against banks who are overcharging customers, ‘revolving’ cards offered in Spain are the following (tarjeta means card in Spanish) :

Revolving Wizink cards: Tarjeta Visa Classic Popular-e, Tarjeta Visa Oro Popular-e, Tarjeta Visa Classic Citibank, Tarjeta Visa Oro Citibank, Tarjeta Citi Classic, Tarjeta Citi Twin, Tarjeta Barclaycard Oro, Tarjeta Pass Carrefour, Tarjeta Visa Cepsa, Tarjeta Iberia

Revolving Bankia cards: MasterCard: Tarjeta MasterCard Champions. Visa: Tarjeta Visa Compras, Tarjeta Visa Crédito Particulares, Tarjeta Visa Crédito Plus, Tarjeta Visa Dual Plus, Tarjeta Visa Flexible, Tarjeta Visa ON, Tarjeta Visa Oro

Revolving BBVA cards: MasterCard: Tarjeta MasterCard Negocios, Tarjeta MasterCard Infinit Oro. Visa: Tarjeta Visa A Tu Ritmo, Tarjeta Visa A Tu Ritmo Blue, Tarjeta Visa Después, Tarjeta Visa Después Blue, Tarjeta Visa CX Oro, Tarjeta Repsol más Visa, Tarjeta Iberia Classic, Tarjeta Iberia Icon, Tarjeta Dorada Renfe, Tarjeta Motor+, Tarjeta Viajes+

Revolving BBVA Consumer Finance cards: MasterCard: Tarjeta Mastercard Travel Club. Visa: Tarjeta Visa Club Vips, Tarjeta Visa Consum, Tarjeta Visa De Compras. Tarjeta Affinity Card

Revolving Caixabank cards: MasterCard: Tarjeta MasterCard Estrella, Tarjeta MasterCard Oro. Visa: Tarjeta Visa Classic, Tarjeta Visa Gold, Tarjeta Visa Gold Flexible, Tarjeta Visa Imagin Crédito, Tarjeta Visa Oro, Tarjeta Visa Platinum, Tarjeta Visa Platinum Gold, Tarjeta American Express Amex Plus, Tarjeta American Express Plus

Revolving Caixabank Consumer Finance cards:Tarjeta Mediamarkt, Tarjeta Ikea, Tarjeta Fnac, Tarjeta Lecrerc

Revolving Banco Sabadell cards: MasterCard: Tarjeta MasterCard Classic, Tarjeta MasterCard SIN, Tarjeta MasterCard Oro. Visa: Tarjeta Visa Classic, Tarjeta Visa SIN, Tarjeta Visa Oro, Tarjeta Visa Shopping Oro, Tarjeta Visa Platinum

Revolving Banco Santander cards: MasterCard: Tarjeta MasterCard Box Gold, Tarjeta MasterCard Día a Día, Tarjeta MasterCard Santander 123, Tarjeta MasterCard Santander 20, Tarjeta MasterCard Santander Plus. Visa: Tarjeta Visa Classic, Tarjeta Santander PRIME, Tarjeta Mundo 1|2|3, Tarjeta Mi Otra 1|2|3, Tarjeta Zero 1|2|3, Tarjeta Mi Otra Zero 1|2|3, Tarjeta Iberia Classic, Tarjeta Iberia Icon, Tarjeta LaLiga Santander

Revolving Openbank cards: Tarjeta Visa 123, Tarjeta Visa Classic, Tarjeta Visa Oro, Tarjetas 

Revolving Santander Consumer Finance cards: Tarjeta Visa Light, Tarjeta Visa Box, Tarjeta Worten, Tarjeta General Óptica

Revolving Oney cards: Tarjeta Leroy Merlin, Tarjeta Alcampo, Tarjeta Decathlon, Tarjeta AKI, Tarjeta Simply

Revolving Abanca cards:Visa: Tarjeta Oro, Tarjeta Clásica, Tarjeta Clip, Tarjeta Proyecto

Revolving Unicaja cards: Visa: Oro, Classic, Tarjeta Gold, Tarjeta Platinum, Tarjeta Blue

READ ALSO: Is it worth reporting your Spanish bank for misconduct and how do you make a successful claim?

Revolving Bankinter and Bankinter Consumer Finance cards: Bankinter: Tarjeta Visa Única (Clásica y Oro), Tarjeta Visa Quiero. Bankinter Consumer Finance: Tarjeta Bankintercard Oro, Tarjeta Bankintercard Platinum, Tarjeta Visa Coinc, Tarjeta Visa Air Europa, Tarjeta Visa Vodafone, Tarjeta Visa BP, Tarjeta Línea Directa, Tarjeta Halcón Viajes, Tarjeta Renault

Revolving Barclaycard card: Tarjeta Visa Classic, Tarjeta Visa Oro, Tarjeta Visa Barclaycard

Revolving EVO Banco y EVO Finance cards: EVO bank: Tarjeta Visa Classic, Tarjeta Visa Extra, Tarjeta Visa Oro, Tarjeta Visa K26+, Tarjeta Mastercard Evo Crédito. EVO Finance: Tarjeta Visa EVO Finance Classic

Revolving Deutsche Bank cards: Tarjetas Visa: Familia, Shopping, Preferente y Preferente Oro, Tarjeta MasterCard Premium Gold, Tarjetas Revolving Cetelem.

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MONEY

When do banks inform Spain’s Hacienda tax office of your transactions?

There are certain account movements that require Spanish banks to inform the Spanish tax office about them order to clamp down on fraud and tax evasion. Here are the types of payments and transfers that they will flag.

Published: 12 May 2023 09:37 CEST
When do banks inform Spain's Hacienda tax office of your transactions?

Spanish banks are obliged by law to inform the Hacienda or la Agencia Tributaria (Spain’s tax office) about certain types of transactions and payments above a certain amount or of a certain type.

This is a way that the Spanish taxman keeps an eye on your financial movements, in order to clamp down on tax evasion and fraud and other financial irregularities.

Since the establishment of Spanish Law 7/2012, banks must inform Hacienda about any suspicious activity in your account.

Spanish tax law outlines “the obligation of these [banking or financial] entities to provide the government with all types of information with tax implications relating to their economic, professional or financial relations with other persons”, according to the Bank of Spain.

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Depending on the amount and origin of the money, the tax office may decide to dig a little deeper into your financial affairs and open an official investigation, or they may not. 

What are the transactions Spanish banks flag?

  • Operations carried out with €500 banknotes. Two fairly recent rulings by the Spanish Supreme Court (in 2013 and 2014) established that banks must report operations in which one or more €500 banknote is used, and that Hacienda can request further banking data on the person in question.
  • Cash income of more than €3,000. Banks are also obliged to report deposits made in cash (whether in coins or banknotes) when it is more than €3,000, regardless of whether the deposit was done in the bank branch at an ATMs.
  • Credits and loans worth more than €6,000. Royal Decree 1065/2007 establishes that bank must also inform the Hacienda of any credit lines or loans of any amount greater than €6,000, and provide the name or company name and tax identification number of the creditor and borrower.
  • Recurring income. Receiving recurring periodic amounts into your account, regardless of the amount of them, also triggers this practice. For this reason, it is generally recommended that payments are made by bank transfer, since that way the Hacienda can easily identify the payer and where the money is coming from.
  • Transactions exceeding €10,000. Spanish banks also report any transactions exceed €10,000 in value, including income, deposits, cash withdrawals, bank transfers or wires.
  • Large deposits or transfers. If the income exceeds €10,000 from outside Spain or €100,000 within the country, you are supposed to declare this before the transaction is completed using the S1 form, which you can find here, and if not the information will likely be deemed suspicious and sent to the Hacienda.

Many of these types of transactions or movements are automatically sent by banks to the tax office. If they are suspicious enough, the Spanish tax office can request further information about your financial movements at any time if it suspects that the origin of the money in it or its movements are suspicious, and it may initiate an inspection procedure against you.

If this happens, they may send you a letter in the post requesting certain documents or clarification, and in some cases for self-employed people and businesses they send tax office employees to the person’s fiscal address in what’s called a visita sorpresa (surprise visit).

READ ALSO: What are Spain’s rules and limits on cash payments?

In Spain tax fraud (evasión fiscal) is considered to be minor if you don’t declare up to €3,000. In that case, you could be subject to a fine of €1,500 from the tax office.

More serious offences can land you with a fine equal to the amount in question, and for very serious cases of tax fraud even a criminal conviction and prison time.

READ ALSO: Tax evasion in Spain: What are the penalties and prison sentences

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