Consumers 'should be better informed about credit terms and costs'

Australia’s financial institutions must make it easier for consumers to understand the costs and conditions involved in a credit agreement, it has been suggested.

Nicole Rich, policy and campaigns director at the Consumer Action Law Centre, told ABC News that many people do not understand what they are signing up for, making it imperative they compare credit cards or home loans in order to secure the best deals.

"[It] sort of makes it pot luck whether you actually get the best deal that’s available to you on that day or not," she said.

"We really need to make it easier for people to understand the most important features … so people can make an informed decision."

The comments come after a University of Queensland study revealed that the vast majority of consumers do not have a clear idea of the full costs involved in a credit transaction.

According to the research, 94 per cent of people could not work out the total cost of credit for a home loan, including interest repayments, using existing disclosure documents.

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