Consumer Credit: No Interest on Financed Insurance and Costs (CJEU, 7th Ch., 23 April 2026, Case C-744/24)

CJEU (7th Chamber), 23 April 2026, Case C-744/24, P.W. v Bank Polska Kasa Opieki SA, ECLI:EU:C:2026:337

What happened in this case?

What was the structure of the credit?

On 26 May 2022, a Polish consumer, P.W., concluded with Bank Polska Kasa Opieki SA a standard-form consumer credit agreement whose “contractual provisions had not been individually negotiated” (paragraph 19), like almost all consumer loans, in Poland as in France.

The amount of the credit was set at 150,000 zlotys (about €34,400). But the borrower did not receive that sum: “PLN 133,214.92 (about €30,550) was actually paid out to P.W., the remaining PLN 16,785.08 (about €3,850) being intended for the payment of credit insurance, called ‘voluntary'” (paragraph 19). This insurance was presented as optional, but taking it out “was accompanied by a reduction in the interest rate of the credit” (paragraph 19): without insurance, the rate would have been higher.

The rate was 8.49% per year. The whole dispute comes down to one sentence: “that interest rate was applied to the amount actually paid out to P.W. in performance of the contract, increased by that of the insurance premium” (paragraph 20). The bank calculated its interest on PLN 150,000, and not on the PLN 133,214.92 actually handed over. The stated APR (TAEG) was 12.57%, over 96 months, for a total cost of credit of PLN 73,858.61 (about €16,950).

What did the borrower claim?

By letter of 18 August 2023, the borrower sent the bank a declaration based on Article 45(1) of the Polish Consumer Credit Act, in order to benefit from “the so-called ‘free credit’ sanction” (paragraph 21). This mechanism is the cousin of the French forfeiture of the right to interest (déchéance du droit aux intérêts): where the lender fails to comply with certain information obligations, the borrower repays the capital “excluding interest and other costs of the credit owed to the lender” (paragraph 18). The borrower criticises the bank for “the imprecise determination of the base on which interest is calculated, […] the indication of an incorrect APR and […] the lender’s ability to unilaterally modify fees and commissions” (paragraph 21). The bank refuses.

On 25 October 2023, he brought proceedings before the District Court of Włodawa to have it held that the credit would be repaid without interest or fees and to obtain PLN 30,051.76 (about €6,900), i.e. the interest already paid and the insurance premium. His central argument: “the interest rate was applied to an amount corresponding to a cost of the credit other than interest” (paragraph 22). The bank replies that the APR is correct, that the borrower “would have liked the bank to include the cost of the insurance in the credit”, and that applying the rate to that amount “was set out in the credit agreement” and in the information sheet (paragraph 23). In short: everything was in writing, the customer signed. An argument our readers know well.

What did the Polish court ask the Court of Justice?

Why did the court doubt the lawfulness of the practice?

The court doubts the conformity with the Directive of the practice “of charging interest on an amount including, in addition to the capital of the credit, the costs of the credit other than interest” (paragraph 24). First question, on the substance: does the Directive preclude non-negotiated clauses “providing for the application of an interest rate not only to the amount paid out to the consumer, but also to the costs of the credit other than interest” (paragraph 25)? Second question, on information: must the bank expressly warn the borrower that “the basis for calculating the capitalised (quantified) interest is an amount other than the amount of the credit actually paid out to the consumer” (paragraph 25)?

The bank challenged the admissibility of the reference with arguments that will be seen again in France: the premium, “paid directly into the insurer’s account” (paragraph 29), would not be a cost of the credit, and the funds of a debt consolidation are likewise not paid to the consumer “for them to dispose of as they wish, whereas there is no doubt that they are capable of generating interest” (paragraph 30). The Court dismisses these objections (paragraphs 31 to 37). Notably, on 20 November 2025, the bank acceded to the borrower’s claim (paragraph 26); as the national proceedings remained pending, the Court nevertheless ruled.

What did the CJEU hold on 23 April 2026?

Is “voluntary” insurance a cost of the credit?

First step, essential for French cases: the classification of the premium. The Court observes that the “voluntary” nature of the insurance “implies that it was not required in order to obtain the loan as such. However, to the extent that taking out that credit insurance was accompanied by a reduction in the interest rate of the credit, that credit insurance was required in order to obtain the loan on the terms set out in the offer for it” (paragraph 41). The premium “thus falls within the concept of ‘total cost of the credit to the consumer’, within the meaning of Article 3(g) of Directive 2008/48” (paragraph 41).

Insurance presented as optional therefore becomes a cost of the credit as soon as it determines the rate or any other condition of the offer.

Does payment into the borrower’s account change anything?

Second step: the classification as total cost of the credit “does not depend on whether or not that amount was paid into a bank account of the borrower” (paragraph 42); the route taken by the funds “is of a random nature and cannot, as such, affect their classification as costs of the credit” (paragraph 43). This clarification puts an end to a classic ploy: passing the premium through the borrower’s account in order to claim that it was “made available”. What counts is the destination of the sum.

What can the interest rate apply to?

The Court relies on autonomous concepts of EU law, already set out in Radlinger (C-377/14) and Soho Group (C-686/19). Since the “total amount payable by the consumer” is the sum of the total amount of the credit and the total cost of the credit, these two latter concepts “are mutually exclusive and […] accordingly, the ‘total amount of the credit’ cannot include any of the sums forming part of the total cost of the credit to the consumer” (paragraph 53). The Directive thus contains “a complete conception of the breakdown of the sums relating to consumer credit agreements” (paragraph 54).

Yet the borrowing rate is the rate “applied […] to the amount of credit drawn down”, and “the total amount of the credit and the amount of credit drawn down designate all the sums made available to the consumer, which excludes those allocated by the lender to the payment of costs linked to the credit concerned and which are not actually paid to that consumer” (paragraph 55). Hence the conclusion, at paragraph 57: “none of the sums intended to meet the commitments agreed under the credit concerned, such as administrative costs, interest, commissions and any other kind of fees which the consumer is required to pay, may be included either in the total amount of the credit […] or in the amount of credit drawn down”. And “that also applies to insurance costs” (paragraph 58).

What is the Court’s answer?

Article 3(g) and (j) of Directive 2008/48, read with Article 10(2), “must be interpreted as precluding the inclusion, in consumer credit agreements, of clauses providing for the application of the interest rate not only to the total amount of the credit, but also to sums allocated to the payment of costs linked to that credit and which therefore form part of the total cost of the credit to the consumer” (paragraph 65 and operative part).

The wording is general: it covers any sum “allocated to the payment of costs linked to that credit”, and therefore also arrangement fees, brokerage commissions or any other charge built into the borrowed capital.

Why does the second question remain unanswered?

On the obligation to expressly inform the borrower that the interest base exceeds the capital paid out, the Court replies that there is no need to rule: “since the insurance costs, as a component of the ‘total cost of the credit to the consumer’ […] cannot be included in the amount of credit drawn down […] there is no need to answer the second question” (paragraph 66).

This is the logical consequence of the first answer: since the practice is prohibited, a perfectly transparent clause does not save a prohibited interest calculation, and the argument “everything was in writing” is deprived of effect. The Court does not rule on the penalty, which is a matter for national law: in Poland, the “free credit”; in France, forfeiture of the right to interest and APR litigation, examined below.

Why is this judgment favourable to borrowers?

Is it a break or a confirmation?

The judgment extends Radlinger (2016, C-377/14), Mikrokasa (2020, C-779/18) and Soho Group (2020, C-686/19). Its novelty lies in two points: the Court draws the consequence of the Directive’s definitions no longer only for the calculation of the APR, but for the very base of the borrowing rate; and it applies it to insurance described as “voluntary”, holding that this label does not prevent its classification as a cost of the credit where taking it out determines the offer.

Can banks circumvent the rule?

The Court anticipates the lenders’ objection: the solution “does not have the effect of limiting the types of costs or fees that may be imposed by the lender on the consumer” (paragraph 59), the lender being able to apply “a proportionately higher borrowing rate, reflecting the cost of not charging interest on amounts corresponding to a cost of the credit” (paragraph 60).

The bank may therefore be remunerated, on one condition: display a single rate, on a single base, so that the consumer can compare. Information on the overall cost “in the form of a rate calculated according to a single mathematical formula, is of essential importance” (paragraph 63), and “such market transparency would be compromised if it were possible to distinguish between several interest rates” (paragraph 64). The mechanism penalised is a hidden rate: a face rate of 8.49% on an inflated base produces a higher real yield, incomparable with competing offers.

How does this judgment fit with other recent CJEU decisions?

The judgment completes a series of decisions delivered in spring 2026, all arising from Polish references and all protective. In the WIBOR case (CJEU, 3rd Ch., 12 February 2026, C-471/24), the Court accepted that the national court may review the transparency of a variable-rate clause based on a reference index. In Case C-679/24 (CJEU, 9th Ch., 19 March 2026), it held that neither its own judgments nor those of national supreme courts start the limitation period running against a borrower who relies on an unfair term.

A coherent policy: the consumer must understand what they are paying and must not be deprived of their remedy by the passage of time. Judgment C-744/24 provides the substantive foundation; judgment C-679/24 removes the most frequent procedural obstacle.

What does this decision change for a borrower in France?

Which contracts are affected?

The judgment interprets Directive 2008/48, transposed in Articles L. 311-1 et seq. of the Consumer Code (code de la consommation), whose definitions (total amount of the credit, total cost of the credit, APR) must be read in accordance with the case law of the Court of Justice. Three families of contracts are particularly exposed.

Debt consolidation. This is the textbook case: the capital repays the old loans, but it is increased by arrangement fees, a brokerage commission and insurance “financed” within the transaction, and the rate applies to the whole. The distinction is nevertheless clear: the sums that repay the former creditors are made available to the borrower; the fees and insurance of the new transaction are costs of the credit.

Car loans and home improvement loans. The financing offered by the dealer or the retailer often includes “job loss” or “death and disability” insurance and fees. If the “promotional” rate is granted only with the insurance, we find the configuration of paragraph 41: the insurance is required “in order to obtain the loan on the terms set out in the offer”.

Personal loans with financed insurance. Even if the insurance is genuinely optional, where the premium is built into the capital and bears interest, the lender must show that it played no role in the terms of the offer; failing that, it falls within the total cost of the credit.

How can you check your contract?

A few checks allow a first sorting. Compare the “total amount of the credit” in the offer with the amount actually transferred to your account or to the creditors repaid. Identify, in the offer and the amortisation schedule, each sum withheld at source (insurance, arrangement fees, brokerage commission, guarantee fees) and check whether it is included in the interest-bearing capital. Re-read the conditions of the rate: if it depends on the insurance (“preferential rate with insurance”), the insurance is a cost of the credit. Finally, have the APR recalculated on the capital actually made available: an APR stated on an inflated base is, by construction, understated.

If an anomaly appears, keep all the contractual documents and send your bank a written, factual complaint, without admitting anything.

What are the consequences under French law?

The Court of Justice leaves the penalty to national law. In France, two main routes emerge, which should be presented with caution, as French case law has yet to absorb this judgment.

Forfeiture of the right to interest. The Consumer Code provides that a lender who fails to comply with the mandatory particulars of the consumer credit agreement (total amount of the credit, borrowing rate, APR, total amount payable) forfeits the right to interest, in whole or in the proportion set by the judge. A contract whose “total amount of the credit” includes costs of the credit, and whose rate applies to a prohibited base, does not contain the exact particulars required. Our readers know how forceful this penalty is in other configurations: requalification of a revolving credit as distinct personal loans, failure to provide proof of address, or failure to prove consultation of the FICP.

The incorrect APR. Since the APR is the total cost of the credit related to the total amount of the credit, an incorrect breakdown mechanically distorts the stated rate. An inaccurate APR also leads to forfeiture of the right to interest, which the judge may moderate; each case requires a recalculation.

Unfair terms. The Court did not have to answer on Directive 93/13, but the route remains open: such a clause, in a standard-form contract, may be challenged on the ground of significant imbalance, with the procedural advantage recalled in Case C-679/24 on limitation periods.

Let us remain measured: the judgment is recent and the French courts have not yet drawn its consequences. But its operative part is clear, its definitions are those of our Consumer Code, and the bank in this case acceded to the claim even before judgment was delivered.

Should you have your credit agreement checked?

Judgment C-744/24 lays down a simple rule: interest runs only on the money actually made available to you. Financed insurance, arrangement fees built into the capital, a commission withheld at source cannot bear interest at the credit rate. If your contract provides for this, it is contrary to EU law, however clearly the bank explained it to you.

This rule concerns a very large number of ongoing contracts. The check is technical, but it may give rise to a substantial reduction in the cost of the credit. A banking law attorney can examine your offer, your amortisation schedule and your statements, measure the gap and determine the most suitable route, taking into account the applicable time limits.

FAQ: Interest on Insurance and Financed Costs