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Advertising has huge potential to influence the credit card you choose to apply for. By highlighting the key benefits of a product and putting additional details in smaller print, advertisements can persuade us of the value of a card while minimising the potential drawbacks.
Whether it’s online, in a newspaper, on television or flashing across a billboard there are rules and regulations that all credit card advertisements must follow. This ensures that the information you receive is factual, clearly communicated and not misleading. Here, we look at the current guidelines and regulations around credit card advertising in Australia so that you can make an informed decision when applying for your next credit card.
Credit card advertising is designed to encourage you to choose specific products through features, promotions and suggestions of the possible outcomes you may achieve if you do so. According to research from the Department of Justice - Consumer Affairs Victoria, there are two key strategies used in credit card advertising:
In addition to these two advertising strategies, Consumer Affairs Victoria reports that promotions also commonly include the appearance of the card (for example if it was gold, platinum or black). Some advertisements also include the suggestion that it would be easy to apply for (and get) a credit card.
The Australian Securities and Investments Commission (ASIC) has identified key risks around advertising for both promoters and consumers. In its guide to advertising financial products and services (Regulatory Guide 234), it says promoters may be tempted to focus on the benefits or advantages of credit cards and give less prominence to “unattractive features”.
“For consumers, there is a temptation to make decisions on the basis of advertisements alone and not to seek further information, even though advertisements necessarily only contain limited information about the product or service.”
This means that, regardless of which strategies are used for credit card advertising, there is potential for it to influence your decision-making process and your behaviour when it comes to using credit cards. That’s why it’s important to understand the advertising strategies, rules and regulations so that you can make more informed decisions when you look at different cards (or other products).
All advertisements for financial products and services in Australia have a legal obligation to provide factual information. As the ASIC Regulatory Guide 234 outlines, promotions must not make “false or misleading statements or engage in misleading or deceptive conduct.”
For credit cards specifically, this means that advertisements should include details such as:
Credit card companies are also required to provide you with a “Key Facts Sheet” before you apply for a particular product. This sheet highlights the financial details of the card, including the promotional interest rates that may apply (and for how long), the standard interest rates for purchases and cash advances, the length of any interest-free period and details of the annual fee and late payment fees.
Many providers also give you access to terms and conditions for the card, as well as information about any rewards program and complimentary extras. This allows you to consider all the relevant details before you apply, rather than just relying on the highlighted features of an advertisement, so you can make a more informed decision about whether or not a card will work for you.
While there are rules and laws that credit card providers must follow when advertising their products, it’s ultimately your responsibility to decide whether or not a card will suit your needs. So if you’re on the market for a new credit card and an advertisement catches your eye, make sure you consider the following details before you apply:
Helena is interested in getting a 0% balance transfer card for her existing $5,000 credit card debt. She’s briefly searched for one online, but hasn’t done much more than that.
One day, while she’s scrolling through her Facebook feed, she sees an ad for a credit card that says: Save with 0% interest on balance transfers for 12 months and $0 annual fee*.
The ad includes an image of the card, which is platinum, and she can see there is fine print relating to the asterisk, but it is too small to read on her screen. So she clicks on the ad to review the full details of the offer. She’s taken to the provider’s page, where the key features are highlighted. Further down, she sees the following details in smaller print:
Instead of hitting the “apply” button on the provider’s page, Helena compares a number of other 0% balance transfer cards. She finds one that offers 0% for 12 months and also reverts to a cash advance rate of 21.99% p.a. but offers no annual fee for life. It also doesn’t charge a balance transfer fee. By applying for the card Helena found through her comparison, she’ll save $75 in the first year, and $199 on annual fees for every year she has the card.
If you’re on the market for a new credit card, advertisements can draw attention to competitive offers based on your interests and needs. However, they can also make it tempting to apply for the first option you find. Instead, you may want to use a credit card ad as a reference point for your comparison so that you can weigh up your options before choosing one that’s right for you.
Picture: Shutterstock
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The BankSA Vertigo Platinum card offers a $300 cashback a low ongoing purchase rate and a range of complimentary insurance covers.
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What are the laws? who can have a credit card in Australia?
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