Credit card consumers are protected by laws to avoid some from falling into the trap of clever credit card advertising.

Credit Card Advertising Rules and Laws

Information verified correct on December 6th, 2016

Just Be Quiet and Sign on the Dotted Line

If that's all a credit card issuer had to do to pull potential users into their credit card schemes, they'd have a lot easier time of it. Unfortunately for them, it's not quite that easy and thus another branch of advertising and marketing has taken hold – credit card hype.

Enticing the Young and the Unaware

Indeed, instead of force, they've had to cajole consumers to draw them in. A study done not too long ago for the Department of Justice, Consumer Affairs, Victoria, entitled "The Impact of Credit Card Advertising on Consumer Decision-Making and Behaviour" listed these ways credit card advertising worked to entice consumers:

  • To enable travel and holidays
  • To be able to buy things online – tickets and EBay purchases were particularly common
  • To track spending, facilitate direct debits, enable savings or claim business expenses – a means of financial management
  • To make ends meet, stretch pay periods, or get through difficult financial times
  • To obtain credit rather more easily and more cheaply than a personal loan
  • To ensure additional funds are available 'just in case' or for emergencies
  • To display status and card presentation, typically for young people who were drawn to having a credit card as a right of passage

The study went on to say: "There is a link between credit card advertising and consumer behaviour and decision-making and it is the more informed and responsible credit cards users that are able to discount irresponsible advertising messages and reject direct offers of credit cards and unsolicited credit limit increases."

A Certain Degree of Sophistication

That last statement indicates that it takes a certain degree of sophistication to understand and responsibly use credit cards. In its summation, the report indicated that many less-than-savvy consumers had to admit that they had to learn the hard way that credit cards aren't free money. That they aren't a source of income. That they didn't understand fees nor interest rates.

Advertising Attempts to Distil Complexity

Credit card advertising helps consumers know what is out there. Understanding all the complexities will help you make the right choice. Sometimes that can be a bit difficult. Always read the fine print and always ask questions. Pay careful attention to ads offering these particulars:

  • Advertising Annual Percentage Rates. Unless a company is specifying the amount of a repayment, it doesn't have to display an annual percentage rate. If an ad does contain a reference to an annual percentage rate, it must also state credit card fees and other charges distinctly. And it must state that the charges and fees are due and payable.
  • Advertising Comparison Rates. If an ad contains comparison rates, they must reflect a calculated nominal rate per annum including any compounding frequency. And it must reveal the amount of credit to which that rate applies and the terms of repayment. A warning should inform the consumer that the rates are accurate for that particular example alone to avoid false impressions.
  • Advertising Interest Rates. If a credit card company discloses its interest rates in an ad, it must be made clear that it is a nominal percentage rate per annum and that it is further calculated as described above regarding compounding throughout the year.
  • Advertising Interest Free Deals. These can be great but be very wary. Usually the money provided for the interest free deal is provided by a third party with its own financing requirements. If terms are not met, interest charges of up to 30% can be exacted and other penalties may apply. Reading the fine print is very necessary with these particular deals.

Cards That Require Scrutiny Beyond the Advertisements

Whenever applying for any credit card, it is incumbent on the applicant to know exactly what kind of deal they are signing and that it fits their financial situation and their financial goals. Time and time again folks are warned to read the fine print, but so many seldom do. And they live – and pay – to regret it. Some cards require extra attention, as their mismanagement can be the path to great debt and even heartache. Watch these cards, they can work when used with care and good timing:

Don't Believe the Hype

Credit card ads will convey the message that credit cards will enable savings and provide a means of living well with debt (a surprising concept!) or gaining greater control of your finances. They will say that with cards you can live life to its fullest and that you will be able to take advantage of all you want in this world. Please pass the salt shaker. Possession of a credit card is a financial convenience that must be managed properly and responsibly. Credit cards are not a passage to a better life no matter what the ads may say.

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2 Responses to Credit Card Advertising Rules and Laws

  1. Default Gravatar
    charlotte | May 25, 2010

    What are the laws? who can have a credit card in Australia?

    • Staff
      Jeremy | May 25, 2010

      Hi Charlotte

      Each credit card has it’s own terms and conditions, but generally speaking, you will need to meet the following requirements:

      Age Requirements: 18 years or older
      Income Requirements: You will be asked to specify the income you earn. Check each credit cards terms and conditions for their minimum income requirement for application
      Residency: You must be a resident of Australia

      You will also need other details at hand to complete the application, like contact details, employer’s details (or accountant details if you’re self employed, and details of your assets and expenditure.

      All the best with your credit card application, and remember to check the terms and conditions before applying! :)

      - Jeremy

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