“Credit Reserve” Requalified as Separate Personal Loans: Total Forfeiture of the Right to Interest (CA Rouen, 19 February 2026, No. 24/04213)

Rouen Court of Appeal, civil chamber, 19 February 2026, No. RG 24/04213

Why Is This Judgment Important?

Consumer credit comes in three main forms: the personal loan (prêt personnel; capital repaid according to a schedule set in advance), tied credit (crédit affecté; linked to the purchase of a specific good or service) and revolving credit (crédit renouvelable; a renewable authorisation allowing successive drawdowns). Each category is governed by distinct information and protection rules. In practice, the boundary between these products is sometimes blurred: some contracts carry a name (“credit reserve”, “cash reserve”, “flexible credit”, “rechargeable loan”) that suggests revolving credit, but in reality conceal successive personal loans.

The judgment handed down by the Rouen Court of Appeal on 19 February 2026 (No. RG 24/04213) addresses this question head-on, and with great clarity. It establishes a method of analysis based on the economic substance of the contract, not on its label. Where each drawdown has its own capital, rate, term and repayment schedule, we are no longer dealing with revolving credit: we are dealing with a succession of separate personal loans, each subject to its own information rules.

What Is the Difference Between Revolving Credit, a Personal Loan and Tied Credit?

What Were the Facts of the Dispute?

A borrower took out with a credit institution what the contract called a “credit reserve” (crédit en réserve). Under this label, which suggests revolving credit, each drawdown in reality gave rise to a specific amortisation schedule, a distinct rate and its own monthly instalments. In other words, with each drawdown: a new capital, a new term, a new repayment schedule.

The borrower, having defaulted, was sued by the bank for payment of the sums outstanding. He argued that the contract was irregular and sought forfeiture of the right to interest.

Why Does the Court Requalify the Contract?

The Rouen Court of Appeal is not deterred by the title of the contract. It carries out an analysis of the economic substance of the transaction.

The Criterion of a Separate Amortisation Schedule for Each Drawdown

If each drawdown corresponds to a given capital, a given term, a fixed rate and a predetermined repayment schedule, then each drawdown is a personal loan. The essential feature of revolving credit, namely a single authorisation envelope and the gradual restoration of availability through repayments, is missing.

Yet each personal loan requires, under consumer law, compliance with specific information and protection obligations. For the contract in dispute, the court lists what should have existed:

• a stand-alone prior credit offer (Article L. 312-57 of the Consumer Code (code de la consommation), formerly L. 311-11);
• a withdrawal period specific to each drawdown;
• an insurance information notice, separate for each loan;
• the mandatory particulars specific to each transaction.

In their absence, the lighter periodic information rules applicable to revolving credit could not apply.

Why Reject the Characterisation as Tied Credit?

The court also rejects the characterisation as tied credit (crédit affecté). The bank, in an attempt to save part of the contract, argued that each drawdown financed the purchase of a good or service and that there was indeed a link with a supply contract. The court refuses this characterisation: since the bank failed to establish a certain link between each drawdown and a specific supply contract, the characterisation as tied credit is not upheld.

This clarification is useful. It prevents the lender from switching in extremis to another legal regime to escape the penalty.

What Is the Penalty? Total Forfeiture of the Right to Interest

Article L. 312-39 of the Consumer Code (formerly L. 311-48) provides that where the lender fails to comply with its prior information and protection obligations, it is forfeited of the right to interest (déchéance du droit aux intérêts), in whole or in the proportion set by the court. The penalty is powerful: the borrower owes only the outstanding capital; contractual interest falls away.

In the case decided by the Rouen Court of Appeal, the penalty is total: the bank is deprived of the right to interest entirely. In concrete terms, over years of repayments this can amount to several thousand euros. The borrower, who has already paid interest, may moreover request that it be retroactively applied to the capital, or even refunded if the capital has already been paid off.

What Can We Concretely Expect From This Decision?

The judgment is instructive and sends several signals.

For borrowers, it is a major lever. If you are currently repaying a product called a “credit reserve” (crédit en réserve), “flexible credit” or “rechargeable loan”, examine your contract closely. If each drawdown gave rise to a specific amortisation schedule, and a dedicated rate and monthly instalment, the contract may be requalified and forfeiture of interest sought.

For consumer credit litigation lawyers, the judgment sets out a clear analytical framework. Rather than challenging this or that particular, one should first question the characterisation of the product: apparent revolving credit or separate personal loans?

For banks, it is a warning. The practice of presenting as revolving credit products that are mechanically far removed from it can no longer rely on the lighter rules of revolving credit.

How Do You Audit Your Credit Agreement?

A methodical audit rests on four simple questions.

First question: what is the exact title of the contract? If it is called a “credit reserve” (crédit en réserve), “flexible credit”, “rechargeable loan”, “cash reserve”, “permanent reserve” or an equivalent term, the analysis is worthwhile.

Second question: with each drawdown, how are the repayments calculated? If each drawdown gives rise to a specific schedule with its own capital, term and rate, this is a strong indication of a disguised personal loan.

Third question: was a stand-alone prior offer signed for each drawdown, or only the initial framework contract? If the prior offer is single for the framework contract, and not renewed for each drawdown that nevertheless has its own schedule, there is a breach.

Fourth question: was a separate withdrawal period available for each drawdown? If not (which is almost always the case in the products at issue), the penalty of forfeiture of interest is likely.

What to Take Away and How to Act?

The judgment of 19 February 2026 (No. RG 24/04213) endorses an economic reading of consumer credit contracts. It reminds us that the court is not bound by the label given to the contract: if the mechanics are those of a succession of separate personal loans, the formalities of the personal loan apply, and failure to comply with them results in total forfeiture of the right to interest.

For borrowers who are being sued, or who are simply repaying a product whose nature raises questions, the judgment opens up a substantial lever. Using it requires an audit of the contract: simply reading the general terms and conditions and the history of drawdowns is often enough to identify the mechanism. At the slightest doubt, a lawyer’s opinion makes it possible to assess the potential for a challenge.

For banks, it is a reminder to comply. Marketing cannot replace the law. A product presented as revolving credit, but which follows the mechanics of a personal loan, cannot rely on the lighter rules of revolving credit.

FAQ: Frequently Asked Questions