Regulatory Alerts2022-03-09
Added · Updated
Instruction No. 5/2022
The Bank of Portugal establishes maximum interest rate limits for consumer credit contracts concluded in the second quarter of 2022, effective April 1, 2022. These caps are calculated based on the previous quarter's average Effective Annual Percentage Rates (APR) plus a quarter, ensuring they do not exceed the market average APR plus 50%. Specific maximum APRs are set at 6.4% for education, health, renewable energy, and equipment leasing, 13.1% for other personal credits, and up to 15.8% for credit cards and overdraft facilities. Maximum Annual Percentage Rates (APR) for credit overdraws are also fixed at 15.8%.
Instruction No. 5/2022 BO No. 2/2022 3rd Supplement • 2022/03/09 .................................................................................................................................................................................................. Topics Supervision :: Behavioral Supervision Mod. 99999940/T – 01/14 Index Text of the Instruction Text of the Instruction Subject: Disclosure of maximum rates applicable to consumer credit contracts in the 2nd quarter of 2022
Decree-Law No. 133/2009, of June 2, which transposed into the internal legal order Directive No. 2008/48/EC, of April 23, on consumer credit contracts, established the regime of maximum rates applicable to these contracts.
According to Article 28 of Decree-Law No. 133/2009, in the current wording, the maximum rates for each type of credit are determined based on the average Effective Annual Percentage Rates (APR) practiced in the market by credit institutions in the previous quarter, plus a quarter. Additionally, the maximum rate of any type of credit may not exceed the average APR of the entire consumer credit market, plus 50%. Applying the criterion defined by law, the Bank of Portugal quarterly discloses the maximum rates for the different types of credit, for application to contracts to be concluded in the following quarter.
The rates defined in this Instruction constitute maximum limits on the charges that can be contracted in each type of credit contract, and under no circumstances may they be referred to as "legal rates". The freedom to contract financing conditions remains, with the sole exception of compliance with these limits.
Thus, in the exercise of the competence attributed to it by Article 17 of its Organic Law and by Article 28 of Decree-Law No. 133/2009, of June 2, the Bank of Portugal determines the following:
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Consumer credit contracts, concluded under Decree-Law No. 133/2009, of June 2, must observe the maximum rate regime defined in Article 28.
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In the 2nd quarter of 2022, the maximum rates for each type of credit contract, as set out in the tables below, are in force:
Instruction No. 5/2022 BO No. 2/2022 3rd Supplement • 2022/03/09 Topics Supervision :: Behavioral Supervision .................................................................................................................................................................................................. Mod. 99999940/T – 01/14 2nd quarter of 2022
Maximum APR Personal Credit Purpose Education, Health, Renewable Energies and Financial Leasing of Equipment 6.4% Other Personal Credits (without specific financing, home, consolidated and other purposes) 13.1% Auto Credit Financial Leasing or ALD: new 3.0% Financial Leasing or ALD: used 4.8% With reservation of ownership and others: new 9.0% With reservation of ownership and others: used 11.8% Credit Cards, Credit Lines, Bank Current Accounts and Overdraft Facilities 15.8%
2nd quarter of 2022
Maximum APR Credit Overdraws 15.8%
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The types of credit contracts listed in the previous tables correspond to the credit categories defined in Instruction No. 14/2013, except for credit overdraws, which are defined in Decree-Law No. 133/2009.
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This Instruction enters into force on April 1, 2022.