Instruction No. 19/2024 on the Calculation and Periodic Disclosure of Maximum Annual Effective Global Charge Rate (TAEG) Limits for Consumer Credit Agreements

Instruction No. 19/2024
Official Gazette No. 12/2024 2nd Supplement • 2024/12/20
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Topics
Supervision :: Behavioral Supervision
Mod. 99999940/T – 01/14
Table of Contents
Text of the Instruction
Text of the Instruction
Subject: Calculation and periodic disclosure of maximum limits for the annual effective global charge rate (“TAEG”) to be observed in consumer credit agreements In accordance with the provisions of paragraph 3 of Article 28 of Decree-Law No. 133/2009, of June 2 (“Decree-Law No. 133/2009”), it is the responsibility of Banco de Portugal to ascertain and disclose the maximum TAEG limits (also referred to as “maximum TAEG”) to be observed in the conclusion of consumer credit agreements in each quarter, as well as to identify the types of credit agreements relevant for the application of these maximum limits. The determination of the maximum TAEG applicable to consumer credit agreements was based on information reported to Banco de Portugal under Instruction No. 14/2013. However, since the information in question is currently also obtained through the Credit Responsibility Central, it appears unnecessary to maintain the reporting duty regulated in the aforementioned Instruction. This Instruction, which revokes Instruction No. 14/2013, identifies the types of consumer credit agreements that are used for the calculation and disclosure of maximum TAEG. Additionally, it specifies how the maximum TAEG are disclosed to the public quarterly. This Instruction was subject to public consultation, in accordance with the provisions of Article 101 of the Administrative Procedure Code. Thus, in the exercise of the competence attributed to it by paragraph 1 of Article 17 of its Organic Law and by paragraph 3 of Article 28 of Decree-Law No. 133/2009, of June 2, Banco de Portugal determines the following:

For the purposes of calculating and disclosing the maximum TAEG limits to be observed in the conclusion of consumer credit agreements, the following types of credit agreements are used:
a) Personal credit:
i) Purposes: Education, Health, Energy transition and Financial leasing of equipment; ii) Purposes: Home, Works, Consolidated credit and Other purposes. b) Car and other vehicle credit:
i) Purpose new cars and other vehicles; ii) Purpose used cars and other vehicles; iii) Financial Leasing or ALD of new cars and other vehicles with purchase option or obligation; iv) Financial Leasing or ALD of used cars and other vehicles with purchase option or obligation. c) Credit cards, Credit lines, Bank current accounts and Overdraft facilities.
Banco de Portugal also discloses the maximum annual nominal rate (“TAN”) applicable to credit agreements in the overdraft category.

Instruction No. 19/2024 Official Gazette No. 12/2024 2nd Supplement • 2024/12/20 Topics Behavioral Supervision :: Behavioral Supervision
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Mod. 99999940/T – 01/14
Article 3
(Categories covered by the types of credit agreements used in the calculation and disclosure of maximum TAEG) The calculation of the maximum TAEG limits applicable to each type of credit agreement identified in the previous article takes into account the following credit categories:
a) Personal credit – credit with a temporal repayment plan, amount and loan duration defined at the beginning of the contract, with the exception of car credit, including the following subcategories:
i) Education purpose – credit intended for financing education expenses that can be deducted for Personal Income Tax (IRS) purposes; ii) Health purpose – credit intended for financing health expenses exempt from Value Added Tax (“IVA”), with a reduced IVA rate and/or with a medical prescription, that can be deducted for Personal Income Tax (IRS) purposes; iii) Energy transition purpose – credit intended for financing the acquisition and installation of renewable energy equipment, or other equipment or interventions, including works, for improving the energy efficiency of buildings; iv) Financial leasing of equipment purpose – financing of equipment involving financial leasing operations with a purchase option or obligation, regardless of the purpose of the leased asset; v) Home purpose – credit intended for the acquisition of furniture and equipment for the home; vi) Works purpose – credit, not secured by a mortgage on immovable property or other equivalent security usually used on immovable property, nor secured by a right relating to immovable property, intended for carrying out works on immovable property for permanent own housing, secondary housing or for rent, with the exception of credits for energy transition purposes; vii) Consolidated credit purpose – credit, not secured by a mortgage on immovable property or other equivalent security usually used on immovable property, nor secured by a right relating to immovable property, whose purpose is the concentration of two or more credits previously held by the borrower into a single loan, in a single institution;

Instruction No. 19/2024 Official Gazette No. 12/2024 2nd Supplement • 2024/12/20 Topics Behavioral Supervision :: Behavioral Supervision
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Mod. 99999940/T – 01/14 viii) Other purposes – credit intended for financing a specific good or service and not included in the previous categories, and credit granted without the purpose of the borrowed amount being defined. b) Car and other vehicle credit – credit intended for the acquisition or leasing of a car or other vehicles subject to registration, with a temporal repayment plan, amount and loan duration defined at the beginning of the contract, including the following subcategories:
i) Purpose new cars and other vehicles – credit for the acquisition of new cars and other vehicles, without any ownership registration; ii) Purpose used cars and other vehicles – credit for the acquisition of used cars and other vehicles, where at least one ownership registration has already occurred; iii) Financial leasing or Long-Term Rental (ALD) of new cars and other vehicles with purchase option or obligation: financing of new vehicles, without any ownership registration, and involving financial leasing or ALD operations with a purchase option or obligation; iv) Financial leasing or Long-Term Rental (ALD) of used cars and other vehicles with purchase option or obligation: financing of used vehicles, where at least one ownership registration has already occurred, and involving financial leasing or ALD operations with a purchase option or obligation. c) Credit card – indefinite duration or automatically renewable contract, without a fixed repayment plan, where a maximum credit limit is established and the use of credit is made through a card, including the following subcategories:
i) With free-float period – credit card that allows the use of credit for a minimum period of 30 consecutive days without interest being charged, regardless of the repayment method agreed with the consumer; ii) Without free-float period – credit card that, in at least one of the possible repayment methods to be agreed with the consumer, does not allow the use of credit for a minimum period of 30 consecutive days without interest being charged; iii) Deferred debit card – credit card where the outstanding balance is always fully paid by the consumer on a date agreed with the institution, with no interest being charged.

Instruction No. 19/2024 Official Gazette No. 12/2024 2nd Supplement • 2024/12/20 Topics Behavioral Supervision :: Behavioral Supervision
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Mod. 99999940/T – 01/14 d) Credit line – indefinite duration or automatically renewable contract, with a fixed repayment plan, where a maximum credit limit is established. e) Bank current account – fixed-term, indefinite duration or automatically renewable contract, without a fixed repayment plan, where a maximum credit limit is established. f) Overdraft facility – credit utilization facility, associated with a demand deposit account, where, in addition to the balance of that account, its movement up to a maximum credit limit previously established in an express contract for that purpose is allowed. Overdraft facilities are distinguished into the following subcategories:
i) With salary direct deposit and repayment period greater than one month – overdraft facility granted based on salary direct deposit, whose contract provides for the obligation of repayment in a period greater than one month; ii) Without salary direct deposit and repayment period greater than one month – overdraft facility granted without salary direct deposit, whose contract provides for the obligation of repayment in a period greater than one month; iii) With salary direct deposit and repayment period equal to or less than one month – overdraft facility granted based on salary direct deposit, whose contract provides for the obligation of repayment in a period equal to or less than one month; iv) Without salary direct deposit and repayment period equal to or less than one month – overdraft facility granted without salary direct deposit, whose contract provides for the obligation of repayment in a period equal to or less than one month. g) Credit overdraft – overdraft tacitly accepted by the institution allowing a consumer to dispose of funds that exceed the balance of their demand deposit account or the agreed overdraft facility.
Article 4
(Method of disclosure of maximum TAEG)
The maximum TAEG limits to be observed in the conclusion of consumer credit agreements and the maximum TAN applicable to credit agreements in the overdraft category are disclosed through the institutional website of Banco de Portugal.

Instruction No. 19/2024 on the Calculation and Periodic Disclosure of Maximum Annual Effective Global Charge Rate (TAEG) Limits for Consumer Credit Agreements

Lineage: In force