Credit involves the deferral of payment of a debt. Buying on credit is not free: the consumer pays interest and fees on the money borrowed as well as the original purchase price. In recent years the use of credit to obtain consumer goods and services has dramatically increased.

Credit can be provided in a variety of forms such as:

Credit can be provided from a variety of sources:

The advantage of using credit is that the consumer is able to use the goods or services when they do not have available cash. Whilst the increased availability and flexibility of credit increases consumer choice comparisons between the various forms can be difficult and problems often occur.

The prudent consumer should take several steps to avoid problems. Consider whether the purchase needs to be made on credit at all. If cash is not available consider using lay-by as a cheaper alternative. Buying on credit should be treated like any other purchase and it is wise to shop around.

Important information to consider:

For further information about the credit see www.moneysmart.gov.au

National Credit Code and Consumer Credit Code - which laws apply?

Contracts signed between 1 November 1996 and 30 June 2010

The old Consumer Credit Code ("Credit Code") covers contracts entered into between 1 November 1996 and 30 June 2010. The old Credit Code forms the basis of the new legislation and is similar in many respects. 

Contracts signed on or after 1 July 2010

The NCC covers credit provided wholly or mainly for personal, domestic or household purposes, as well as for investment in residential property. In addition to applying to contracts entered into after 1 July 2010, it also covers continuing credit contract (such as credit cards) from that date, no matter when the card was first obtained.