EU Court: interest on credit costs violates directive — RMF24

The Court of Justice of the European Union, in case C-744/24, found that provisions in credit agreements providing for interest to be charged on amounts intended to cover consumer credit costs are contrary to Directive 2008/48/EC. The case was referred to the CJEU by the district court of the Polish city of Włodawa, RMF24 reports.

The dispute concerned a consumer credit agreement concluded in May 2022. The borrower took out a loan of 150,000 zlotys but actually received 133,214.92 zlotys. The bank allocated a further 16,785.08 zlotys to finance insurance.

The bank applied an annual interest rate of 8.49% to the entire loan amount, including the part intended to pay the insurance premium. The consumer challenged this arrangement because interest was also charged on funds covering costs related to obtaining the loan.

Borrower’s funds and credit costs

The CJEU distinguished between funds actually provided to the borrower and costs related to obtaining financing. Such costs may include a loan disbursement fee or an insurance premium. The mere fact that these payments are financed under a credit agreement does not make them capital on which contractual interest may be charged.

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At the same time, the ruling does not prohibit banks from charging fees or insurance payments. It also does not mean the automatic invalidity of all agreements under which such costs were financed by credit: the consequences must be assessed in light of the terms of the specific agreement.

Interest paid before the ruling

In September 2026, Poland’s financial ombudsman considered a proposal from the banking sector on implementing the ruling. It provided for changing the practice of charging interest and settling part of the amounts already collected. The ombudsman stressed that calculations should also take into account interest collected before the ruling was issued, and that the procedure should be transparent and not restrict consumer rights.

The ruling does not grant all borrowers an automatic right to the so-called free credit sanction provided for by Polish law. Its application requires establishing a breach of the creditor’s obligations defined by law and meeting other conditions, including those concerning the type of agreement and time limits.