Consumer Credit Code - including comparison rates

Although we have responsibility for many aspects of credit and borrowing money some consumer credit issues are dealt with under state and territory laws by fair trading or consumer affairs departments. Our responsibilities in credit and borrowing.

Consumer Credit Code

State and territory governments have all adopted the Consumer Credit Code which applies across Australia.The Code applies to credit providers such as banks, building societies, credit unions, finance companies and businesses:

if they charge for credit and
If their customers are individuals or residential strata corporations who use it mostly for personal, household or domestic purposes.

For more information about the credit code visit the credit code website at www.creditcode.gov.au or visit your own state or territory fair trading or consumer site.

Comparison rates

One part of the Consumer Credit Code requires that credit providers must include a comparison rate when they advertise fixed term credit which is for, or mainly for, personal domestic or household purposes. The comparison rate includes:

the interest rate
fees and charges.

For example if a bank advertises an interest rate of 5.49% its comparison rate might be 6.75%.

You'll find the comparison rate useful for comparing rates between different loans. However, because the comparison rate does not include all fees and charges and other services, you need to consider all of a loan's features not just the comparison rates. For example, the comparison rate does not include:

government fees and charges
charges that are only charged in certain circumstances, for example if you pay off the loan early
factors that make the loan more attractive such as access to fee free accounts or flexible repayments arrangements.

For more information about comparison rates, read the following two pdf files on the credit code website: Comparison rates: a consumer guide and Comparison rates: frequently asked questions.

Tips from FIDO about credit

FIDO Website: Printed 07/31/2010