Rates applied to unarranged overdrafts and credit facility over-limits

Banks can only charge the rates reported to, and published by, the Banco de España for overdrafts on current accounts over-limits.

Even though banks are free to decide the interest rates they apply, pursuant to Ministerial Orden EHA/2899/2011 (in Spanish)Abre en ventana nueva they have to publish and inform the Banco de España about the interest rate or surcharge for deposit account overdrafts and credit facility over-limits.

An unarranged overdraft occurs when money is withdrawn from an account with an insufficient balance but the bank decides to lend the necessary funds. The rates charged in such cases may not exceed those reported to Banco de España.

The legislation distinguishes between overdraft facilities for consumers and those for other customers (professionals and companies). According to Article 20.4 of Law 16/2011 on consumer credit agreements (in Spanish)Abre en ventana nueva, the main characteristic of consumer overdrafts is that the accrued interest plus bank charges cannot result in an APR exceeding the statutory interest rate multiplied by 2.5.

An unarranged over-limit occurs when money is withdrawn exceeding the credit limit set by the bank, such that the bank extends more credit than originally agreed. When no interest rate has been agreed beforehand for over-limits, the rates reported each lender has reported to the Banco de España will apply.

You can check the public information about fees and other interest rates on unarranged overdrafts and over-limits hereAbre en ventana nueva.


Did you find this information useful?