Non-interest costs of credit and the applicability of the rate of interest: the CJEU in C-744/24

In April 2026, the CJEU delivered a judgment in C-744/24 P.W. v Bank Polska Kasa Opieki S.A. This is an interesting case because it tackled the scope and meaning of various cost-related notions in  Directive 2008/48/EC on Consumer Credit, as well as the common practice of tying credit products to other products, such as insurance.

The consumer entered into a loan contract for 150 000 zlotys (PLN) (approximately EUR 34 400), where PLN 133 214.92 (approximately EUR 30 550) was actually paid to the consumer, with the remaining PLN 16 785.08 (approximately EUR 3 850) being used to pay for credit insurance, described as ‘voluntary’. Taking out that voluntary insurance reduced the interest rate. The consumer paid a total of PLN 207,073.53 (approximately EUR 47,500); the total cost of the credit was PLN 73 858.61 (approximately EUR 16 950). That cost included interest of PLN 57 073.53 (approximately EUR 13 100) and an insurance premium of PLN 16 785.08 (approximately EUR 3 850). The interest rate was 8.49% per annum (comprising a base rate of 4.36% and a margin of 4.13%). That interest rate was applied to the amount actually paid to the consumer under the contract, plus the insurance premium. The APR stated in the credit agreement was 12.57%. The term of the agreement was set at 96 months.

The consumer disputed the correct calculation of the APR and started an action before the Sąd Rejonowy we Włodawie (District Court, Włodawa, Poland); which asked the CJEU:
Is Article 3(g) and (j) of Directive 2008/48, read in conjunction with Article 10(2) of that directive, must be interpreted as precluding the inclusion, in consumer credit agreements, of terms 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 associated with that credit and which, as a result, form part of the total cost of the credit to the consumer. In other words, whether the rate of interest can be applied to other components of the cost structure (forming part of the total cost of credit) rather than the total amount of credit.

The dispute therefore raised the question of the regime of non-interest costs, or as introduced in the applicable Polish law, ‘cost of credit excluding interest ’, such as the insurance premium in question.

Under Article 3(g) the total cost of the credit to the consumer means all the costs, including interest, commissions, taxes and any other kind of fees which the consumer is required to pay in connection with the credit agreement and which are known to the creditor, except for notarial costs; costs in respect of ancillary services relating to the credit agreement, in particular insurance premiums, are also included if, in addition, the conclusion of a service contract is compulsory in order to obtain the credit or to obtain it on the terms and conditions marketed. Under Article 3(g), therefore, all costs in question are part of the total cost of credit, including non-interest costs such as the insurance premium. Although labelled as voluntary, because it provided access to a better rate, it directly falls under the components of the total cost of credit (see para 41). It is also important that the CJEU noted that it does not matter what sum was actually paid to the borrower. The fact that the insurance premium was not first transferred to the borrower, who would then transfer it back to the bank, does not affect the definition of the total cost of credit. The insurance premium, therefore, was part of the total cost of credit. Under Article 3(i), the total cost of credit is expressed as an annual percentage. The APR ‘means the total cost of the credit to the consumer, expressed as an annual percentage of the total amount of credit, where applicable, including the costs referred to in Article 19(2)’.

The CJEU then further analysed other concepts in the Directive. Under Article 3(l) the total amount of credit means 'the ceiling or the total sums made available under a credit agreement'; whereas  under article 3 (h) total amount payable by the consumer ‘means the sum of the total amount of the credit and the total cost of the credit to the consumer ', whereas under Article 3(j) the borrowing rate is the ‘interest rate … applied … to the amount of credit drawn down’. The CJEU noted that the total amount of credit and the amount of the credit drawdown designate the sums made available to the consumer, which excludes those used by the lender to pay the costs connected with the credit concerned and which are not actually paid to the consumer (para 55).

Based on this and referring to its earlier practice, the CJEU concluded that the concepts of total amount of credit and total cost of the credit are mutually exclusive and that, consequently, the ‘total amount of credit’ cannot include any of the sums forming part of the ‘total cost of the credit’ to the consumer (para 53). Consequently, ‘none of the sums intended to cover the agreed commitments under the relevant credit concerned – such as administrative costs, interest, commissions and any other type of charge which the consumer is required to pay – may be included either in the total amount of credit, within the meaning of Article 3(l) and Article 10(2) of Directive 2008/48, or in the amount of the credit drawdown within the meaning of Article 3(j) of Directive 2008/48 (para 57).   That also applies to insurance costs (para 57).

The CJEU ruled that Article 3(g) and (j) of Directive 2008/48/EC, read in conjunction with Article 10(2) of that directive, must be interpreted as precluding the inclusion, in consumer credit agreements, of terms 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 associated with that credit and which, as a result, form part of the total cost of the credit to the consumer. In short, the CEU ruled that interest cannot be applied to the payment of the sums that are used to cover insurance premiums and other costs of credit.

This is an important ruling that addressed the frequent practice of banks to condition one product on another. This practice of tying and bundling is now addressed in the new Directive 2023/2225 on Consumer Credit, which enters into force on November 20 2026. The ruling remains relevant as it deals with the regime of costs associated to such practices. The ruling is also relevant to other non-interest costs associated with the loan. Although these are part of the total cost of credit and are part of the APR, they cannot be part of a basis on which the interest is calculated on. The interest rate, based on the judgment, can only apply to the what falls under the total amount of credit, the actual sum made available by the creditor to the consumer.

Early repayment and reduction in the total cost of mortgage loans C-76/22

Another interesting case tackled by the CJEU was C-76/22 QI v Santander Bank Polska S.A., focusing on Directive 2014/17/EC on Mortgage Credit (MCD) and the rules on the calculation of the reduction of the total cost of credit in case of early repayment. Although the judgment was delivered almost two years ago, it remains relevant as one of the few cases interpreting the MCD, and there has been no other case on the matter.

The consumer entered into a 36-month mortgage loan with the bank. However, the consumer fully repaid the loan within 19 months. At the time of granting the loan, the consumer paid a 2.5% commission on the amount borrowed, which was included in the total cost of credit. After full repayment, the consumer requested a refund of the portion of the commission paid corresponding to the remaining loan period (the period after full repayment). 

The bank claimed that the commission for granting the mortgage was a one-off payment and was therefore excluded from the obligation of refund, but even if it would be refundable, reimbursement should not be proportionate to the period covered by the early repayment in relation to the repayment duration initially agreed, but should be proportionate to the profit expected by the creditor.

Under scrutiny was Article 25(1) of MCD, according to which '[m]ember States shall ensure that the consumer has a right to discharge fully or partially his obligations under a credit agreement prior to the expiry of that agreement. In such cases, the consumer shall be entitled to a reduction in the total cost of the credit to the consumer, such reduction consisting of the interest and the costs for the remaining duration of the contract.

The CJEU was first asked to answer whether the one-off commission falls within the category of costs considered when calculating the reduction in the total cost of the mortgage credit. In answering the question, the decisive point for the CJEU was whether charges are regular payments and whether the amount of (one-off) payments is objectively linked to the duration of the contract. However, as the bank did not provide the relevant information to be able to answer the question, the CJEU reformulated the first legal question to: whether Article 25(1) MCD must be interpreted as meaning that, in the absence of information provided by the creditor enabling a national court to ascertain whether a commission charged when concluding a mortgage agreement falls within the category of costs that are independent of the duration of that agreement, that court must consider that such a commission is covered by the right to a reduction in the total cost of the credit referred to in that provision.

The CJEU noted that national courts must satify themselves that the costs imporsed by the consumer, irrespective of the duration of the credit agreement, do not objectively constitute remuneration of the creditor for temporary use of the capital which is the subject matter of that agreement or for services which, at the time of early repayment, had not yet been provided to the consumer (para. 33). Therefore, a national court cannot presume, solely on the basis that a charge was paid by the consumer in a single instalment when concluding the mortgage agreement, that that charge falls within the costs that are independent of the duration of the agreement, which therefore cannot result in a reduction in the total cost of the credit referred to in Article 25(1) (para. 34).

The CJEU ruled that in the absence of sufficient information, whether the costs are objectively linked to the duration of the contract or whether those costs are independent of that duration, and to ensure that the consumer is not adversely affected by that absence of information, the national court is required to find that the costs concerned are not independent of the duration of the contract and are, consequently, covered by the right to a reduction in the total cost of credit in Article 25(1) MCD, even if the costs were paid in a single instalment when the agreement was concluded.

By the second question, the CJEU was asked whether Article 25(1) requires a specific methodology for calculating the reduction in the total cost of credit.

The CJEU noted that there is nothing in the wording of the provision that would suggest that, and reiterated the purpose of Article 25(1), which guarantees that Member States will provide for the consumer's right to discharge fully or partially his or her obligations under a credit agreement prior to the expiry of that agreement. Secondly, in the event of early repayment, the consumer is entitled to a reduction in the total cost of the credit, which consists of the interest and the costs for the remaining duration of the contract. In this regard, Member States enjoy discretion, provided that the chosen methodology ensures a high level of consumer protection. 

The CJEU therefore ruled that there is no specific methodology for calculating the amount of the reduction in the total cost of credit referred to in Article 25(1).

This is an important judgment that sheds light on the way that the reduction in the total cost of credit in the event of early repayment should be calculated. It is also a warning to banks to be transparent about how their costs are calculated when communicating with all stakeholders, including courts. An interesting comparative point can be added: Article 29(1) of Directive 2023/2225 on Consumer Credit (CCD2) contains a similar provision that, in a way, seems to clarify the vagueness of the MCD and support the CJEU's position. According to Article 29(1) of CCD2, early repayment entitles consumers to a reduction in the total cost of the credit for the remaining duration of the contract. When calculating that reduction, all the costs imposed on the consumer by the creditor shall be taken into consideration.  The CCD2, therefore, refers to all costs, including all fees and commissions, regardless of how and when they were payable.