A maximum cap of 48 per cent per year applies on all new consumer credit contracts in Queensland. The cap puts a limit on the amount of interest, fees and charges a lender can put on a loan.
The Credit (Commonwealth Powers) Act 2010 sets out a formula for calculating the total cost of credit to determine whether it is under the capped rate.
The lender still decides whether to provide a loan, but all new loans must be subject to the 48 per cent cap.
If an existing contract's terms change, it must comply with this legislation. These changes include when interest rates or fees increase, additional fees are charged or the term of the loan changes.
The cap does not affect a borrower's right to apply for changes to their loan on the grounds of hardship. Under the Commonwealth legislation, the National Consumer Credit Code, any borrower facing hardship because of illness, unemployment or other reasonable cause can apply to the lender to change the terms of their contract.
Calculating annual percentage rates
You must calculate a credit contract´s annual percentage rate according to section 4 of the regulation.
When you calculate the annual percentage rate, include all interest charges, and credit fees and charges, other than government fees, charges and duties. (Include the credit fees and charges ascertainable at the time of calculation).
Occasionally, a borrower will request that credit providers:
- extend their contract period and reduce each payment amount due under the contract (without changing the annual percentage rate or rates)
- postpone the dates on which payments are due for a specified period (without changing the annual percentage rate or rates)
- extend their contract period and postpone the dates on which payments are due for a specified period (without changing the annual percentage rate or rates).
When this occurs, you must comply with the hardship provisions in the National Consumer Credit Code. For more information, visit the ASIC website.
Credit card payment fees
By law, suppliers of goods and services who accept payment by credit card do not have to charge a fee for credit card payments.
If you do decide to charge a fee, ensure your customers know this and the cost (either as a dollar amount or percentage figure) before they enter into the transaction.
Last reviewed 18/11/2011