Revolving credit cards. What is pre-contractual information and how must your bank provide you with it?
You are entitled to receive the necessary pre-contractual information from the bank or intermediary marketing the card at no cost and sufficiently in advance of signing the card contract, so that you may compare offers and think before deciding on whether or not to enter into the agreement. It consists of the standard European consumer credit information (SECCI) which must be given to you on paper, electronically or on another durable medium.
A note of advice: don’t rush. Take your time to study it thoroughly before making up your mind.
A durable medium is one that can be saved in a format whose content cannot be altered. Therefore, it is not enough for the bank to send us a link to the document that it has published on its website.
Besides providing you with information on the main features of the contract you are about to sign, the SECCI allows you to compare with other offers. If you have not been supplied with this prior information, your contract may be subject to cancellation.
The information must be presented in clear and understandable language using a readable font size.
Particularly relevant information contained in the SECCI must be displayed prominently, and you should pay particular attention to it. For example:
- the payment method and instalment with which the card is issued
- the “cost of credit” in terms of nominal interest rate and APR for all of the card’s payment methods.
- a section on the “Annual Percentage Rate (APR)” which includes a representative example for its calculation
- a section on “mandatory ancillary services to obtain the credit”, which must specify whether it is necessary to hold a current account with the bank or to take out any other product, such as insurance, to obtain the card. If so, the price of this ancillary service must be stated.
Depending on the channel through which you take out the card, you must bear in mind that:
- It is common for bank branches to use digital devices on which you can sign your name to indicate that the bank has supplied you with the pre-contractual information. If this is the case, make sure you have received it before you sign.
- Outside the branch network, usually at retail outlets, if electronic devices such as tablets are used to show you the content of the SECCI, it is important that you see the full content. Also, the salesperson has to give you the information on paper or another durable medium. Only after receiving it should you sign to acknowledge receipt.
- Over the phone, the bank can send you the SECCI immediately after you take out the card, but first it must describe its main characteristics to you, including its credit limit, payment methods, the possibility of making changes and how to do so, possible minimum or maximum instalments, duration, linked products, applicable rate and, especially, the APR, explained by means of a representative example.
- On digital channels, such as a website or an app, the bank must also provide you with the SECCI prior to you signing the contract. Unfortunately, we are all used to checking “I have read” boxes without actually having done so. For your own good, don’t do this when you are taking out financial products.
In any case, remember that you can withdraw from the contract within 14 calendar days of signing it with no obligation to provide justification and no penalty, as easily as when you signed it.
The pre-contractual information process is so important that, as provided for in the regulation, it must go hand in hand with adequate explanations by the bank. We will clarify this in the next post.