This concerns consumer loans of up to €100,000, unsecured, with the draft law from the Ministry of Development set to go to public consultation within May.

The reform marks a significant shift in consumer credit, aligning Greek law with EU directives to prevent situations where financially distressed borrowers are forced to repay two or even three times the original capital borrowed.

Under the new framework, borrowers will have the right to withdraw from a loan agreement within 14 days of signing, as these loans carry minimal costs due to the absence of collateral.

The rules apply to consumer loans up to €100,000, including credit cards — a crucial inclusion given that high credit card interest rates often lead to debts more than doubling over time.

At a time when credit cards are increasingly used to cope with inflation and rising living costs, the risk of new defaults is significant. However, the new system introduces a safety net, protecting consumers from excessive charges when restructuring their debt.

The bill will be submitted for consultation in May. According to Ministry sources, banks have already formed a working group to contribute to its drafting, as these changes are part of Greece’s obligation to harmonize with EU law.

More specifically, the legislation will cap total repayment for unsecured consumer loans at 30%–50% above the original capital. For example, a €100,000 loan could not exceed €130,000–€150,000 in total repayment. The exact percentage will be determined after consultation and may vary depending on the type of loan.

What consumers owe today

Interest rates remain high:

• Credit cards: 15.5%–18% for purchases, 18%–20% for cash withdrawals (plus additional charges)
• Consumer loans: 8%–15%, depending on borrower profile

These rates often cause debt to escalate rapidly, even for borrowers making regular payments.

As of February:

• Credit card balances stood at €2.26 billion
• Total consumer debt (including cards) reached €8.53 billion

What happens after the law passes

If total debt exceeds the legal cap (30%–50% above the principal), the excess amount will be automatically written off. This applies to both bank-held loans and those managed by servicers.

The consultation process will determine whether the law applies only to new loans or also to existing debts.

Limited impact on banks

The financial impact on bank balance sheets is expected to be limited, even if the law includes older debts. Estimates suggest additional provisions will not exceed €200 million.

This is largely because many heavily compounded loans have already been transferred to servicers, which often apply significant write-downs — sometimes reducing debts to the level of the original principal or even lower.

As a result, the burden on banks is expected to remain manageable and not materially affect their financial stability.