This page includes advice on:
- your consumer rights
- things to be aware of
- high-cost credit (and the alternatives)
- advice to be a savvy consumer
Who can help?
Different organisations look after the various aspects of the credit and lending system in Australia. Find out which one is looking after your concern below.
NSW Fair Trading
Australian Securities and Investments Commission
The Australian Securities and Investments Commission (ASIC) is the national regulator for consumer credit (eg home loans, personal loans, credit cards, financial advice services). ASIC licenses and regulates banks, credit unions and brokers to ensure they do not give credit you cannot pay back.
If you have a complaint about anything on the list below, visit the consumers section on the ASIC website for more information.
- loans and credit cards
- investment and financial advice
- superannuation and Insurance, or
- dealing with insolvent companies.
You can also contact them about unclaimed money.
Australian Financial Complaints Authority
The Australian Financial Complaints Authority (AFCA) can help you with complaints or queries about:
- a credit product or service
- a financial service provider’s decision on chargeback
- ‘buy now, pay later’ interest free finance.
Your consumer rights
Australian Consumer Law guarantees your rights when you buy goods and services. In fact, most products and services purchased after 1 January 2011 come with an automatic consumer guarantee that the product or service you purchased will work and do what you asked for. This includes credit and loan services.
You have the right to receive:
- goods and/or services that are of acceptable quality (that is, provided with due care or skill, fit for purpose, and provided in a reasonable time)
- remedy when things go wrong (repair, refund or replacement)
- proof of purchase (like an invoice, cash register receipt, handwritten receipt or lay-by agreement)
- documentation of any contract you have entered into.
Credit providers (including lenders and finance brokers) are subject to consumer credit laws under the National Credit Code (NCC) in Schedule 1 of the National Consumer Credit Protection Act 2009.
The NCC governs the way credit providers can lend credit to consumers, ensuring you are informed about the product/service you’re receiving, as well as the contract terms, and any associated fees and charges.
When advertising, credit providers must:
- include a comparison rate when advertising fixed-term credit (for domestic purposes)
- include the interest rate and applicable fees and charges
- not include government fees and charges, or one-off fees (like early payouts).
Before entering a contract, credit providers must give you a pre-contractual statement and an information statement with the following information:
- credit provider name and licence number
- contact details
- amount of the credit
- repayment terms
- percentage rate
- fees and charges
- advice of your right to complain and access an external dispute resolution scheme
- your statutory rights and obligations under the contract.
"Like any contract, loan agreements must be in writing (digital or hard copy) and specify all the terms and conditions, including any fees. The agreement will also include the dates your payments are due."
During the contract, the credit provider is also required to give you periodic statements of account, so you can stay up to date with payments and know how much you have left to go on the contract.
Credit providers may be able to change the details of your contract if it is already specified in your contract. If there is a change clause in your contract, if will include details on how you’ll be informed. Providers must advise you when any changes to the contract occur.
Guarantors must also be given a copy of the loan contract and a document explaining their rights and liabilities before signing a guarantee for someone else’s loan.
Note: The NCC does not apply to low-cost short-term credit (under 62 days in duration).
Learn more about contracts now.
Personal loans can be a good alternative to credit cards. The interest rate is often cheaper and encourages a more disciplined way of paying a loan if you're tempted to only pay the minimum required on your credit card account.
Make sure you weigh your options, consider your budget and get financial advice if necessary.
‘Buy now, pay later’ interest-free finance
Interest-free finance, also known as ‘buy now, pay later’, are popular because they allow you to buy and use goods/services immediately and pay the bill in instalments. They are short-term loans.
When you use this service, the service pays your bill with the business up-front and you pay the service back, rather than the business where you purchased the goods/services.
Consumers can apply for an account. Your application will be considered alongside your credit score, your employment status/income stability and whether you can pay back the loan.
If the item you’ve purchased goes on sale later, you are still required to pay the original price you accepted in the agreement.
If you want to cancel your account later, your account balance must be at $0.
Fees and charges
While interest-free loans may not charge interest on your purchases, there may still be fees and charges associated with your account. This could include monthly account fees, dishonour and late fees, processing fees and establishment fees.
You are required to make a minimum payment each month to pay down your bill. If you miss a scheduled payment, you will be charged a late fee. Late fees can vary, so it’s important you know what you are signing up for and the fees you could be charged if you miss a payment.
Remember, if you set up automated debit for service payments and you don’t have enough money in your nominated account when the payment is to be processed, you may be charged an overdraw fee from your bank as well.
If you can't pay
A chargeback is like a refund. Chargeback is the term used by operators of credit and debit card schemes (i.e. Visa, MasterCard, EFTPOS, American Express and Diners Club) for the reversal of a transaction in certain circumstances.
The chargeback process takes place between the cardholder’s and the merchant’s banks, whereby the merchant’s bank agrees to remit funds back to the cardholder’s bank in the event of chargeback request. The terms and conditions for chargebacks are set by the operator of the card scheme and form part of the agreement with the merchant.
You may want a chargeback when:
- you dispute a transaction on your credit card
- goods or services you bought were not as described
- goods or services you bought were not supplied
- a transaction is duplicated or fraudulent
- charges are made without your permission
- the trader you purchased goods or services from stops operation and you did not get what you paid for.
Chargebacks can only happen in certain circumstances and there is no guarantee you will get one. It will depend on the:
- reasons you give for wanting the charge back
- terms and conditions of your card or bank account
- rules of the credit or debit scheme (such as Visa, MasterCard or American Express)
- Merchant Agreement which sets out when a transaction is invalid or unacceptable.
"Time limits apply to chargeback claims. They can vary from 45 to 120 days from the transaction date so check with your card issuer and submit your claim as soon as possible."
Chargeback is not available when you:
- pay with cash, money transfer, cheque, direct debit or BPAY
- are eligible to lodge an insurance claim
- have already been compensated.
The chargeback process is separate from other dispute resolution services, like those available through eBay or PayPal. You may also have a right to a chargeback for PayPal purchases if your credit card is linked to your PayPal account, and PayPal’s dispute resolution process was unsuccessful.
If you’re not satisfied with your card issuer’s decisions on a chargeback, you can make a complaint with AFCA.
Things to be aware of
Consumer credit insurance covers you in case you can’t make repayments. Credit providers can’t force you to take out this insurance but they can insist that you insure mortgaged goods against loss or damage (eg comprehensive insurance on a motor vehicle).
The insurance doesn’t have to be arranged through the lender, we encourage you to shop around.
Learn more about insurance.
Early payout and termination fees
An early payout fee may be charged when you pay back the total amount of money owed under a contract before it expires. This charge is most commonly found in home loan contracts, where the bank etc would have received money from the interest charges.
Early payout fees must be disclosed in the original credit/loan contract, or the credit provider must give you notice (in writing) before the introduction of such a fee.
Finance brokers negotiate with banks, credit unions and other credit providers on your behalf to arrange a loan. Broker fees or commission for arranging a loan is often paid by the credit provider whose products they sell. This has the potential to influence their recommendation of one product over another.
By law, finance brokers must:
- use written, signed contracts
- keep records for seven years.
They are not allowed to:
- charge excessive fees
- take payment before your credit is secured.
If you are dissatisfied with their service and you’ve tried to resolve your issue directly with the broker, contact us and we might be able to help. You can also go to the NSW Civil and Administrative Tribunal.
Do not use high-cost credit
High-cost credit is a loan offered by fringe lenders with high fees and interest rates. These high-cost loans are promoted as a way of solving your financial problems but are more likely to keep you in a never-ending debt cycle.
We strongly advise you against using them. There are better alternatives to high-cost credit, some of them are listed below.
Credit unions offer loans for as little as $200 with terms starting at three months. They look at your repayment ability and lend to those on welfare benefits.
No Interest Loan Scheme
The No Interest Loan Scheme (NILS) offers interest-free loans of up to $1,500 for essential household goods and medical equipment. The scheme provides loans to individuals and families with a low income, so they can purchase goods and services such as:
- household items (eg fridges, washing machines, stoves, dryers, freezers and furniture)
- some medical and dental services
- education essentials such as computers and text books
- car-related expenses.
Loans cannot be used for cash, bond, rent arrears, holidays, bills or debt consolidation.
To be eligible for NILS you must:
- have a health care card/pension card or earn less than $45,000 a year (after tax)
- reside in your current premises for more than three months
- show willingness and capacity to repay the loan.
Visit the NILS website to learn more and find your nearest NILS provider.
NAB and Good Shepherd Microfinance offer the StepUP loan. It is a low interest, no fee loan for people on low incomes who have difficulty accessing credit from a bank.
You can borrow between $800 and $3,000 to purchase items like second-hand cars or repairs, household items, computers, vocational education and medical expenses, and repay your over a set term of up to three years.
StepUP loans are specifically for people who:
- hold a current Centrelink health care card, pension card or receive Family Tax Benefit A, and
- have lived at their current address for more than three months.
Loans cannot be used for cash, debt consolidation, holidays or bills.
Visit the StepUP website or call 13 64 57 for more information and to find your nearest StepUP provider.
The Salvation Army can help families with:
- food vouchers/food parcels
- furniture and other household items
- accommodation vouchers and housing costs
- electricity, gas, rates and other bills
- public transport fares
- medical and educational expenses
- other forms of help appropriate to the individual.
To find your local Salvation Army Community Service Centre call 1300 363 622.
Be a savvy consumer
Tips when using credit
- Pay your account in full each month whenever possible.
- Take advantage of any ‘interest free’ period.
- Use your card for purchases only, not cash advances.
- Use debit cards (ie where money is deducted straight from your bank account).
- Remember that department store cards may have higher interest rates.
- Don’t treat credit cards as ‘money on tap’.
- Don’t buy something on credit that you wouldn't have bought for cash.
- Don’t ignore the warning signs such as reaching your credit limit or needing to use your card for a cash advance.
Check your credit rating
Credit reporting agencies hold information on your credit history. The type of information can include loan applications or enquiries made through member subscribers, late payment and default history, address and employment details. Credit reporting agencies may be able to check your credit worthiness and provide you with information on whether you’ve had problems repaying a loan.
To get a copy of your individual credit file, call one of the credit reporting agencies listed below or visit their website.
Equifax Credit Report
Telephone: 138 332
Postal address: PO Box 964, North Sydney NSW 2059.
Telephone: 1300 734 806
Postal Address: PO Box 7083, Sydney NSW 2001.
The Federal Privacy Act 1988 contains strict safeguards for handling people’s consumer credit information by the credit industry. If you believe a listing with one of these credit agencies is incorrect, the Office of the Australian Information Commissioner (OAIC) might be able to help. Call the OAIC on 1300 363 992.