What are my rights if I signed up for a credit card I can't afford?

Okay, here's a breakdown of your rights if you've signed up for a credit card and are finding it difficult to manage, based on the provided Australian legislation:

In Plain English

If you've got a credit card that's becoming a struggle to pay off, here's what you should know:

  • Unsuitable Contract: Credit providers have a responsibility to make sure the credit card is suitable for you. This means they need to check if you can actually repay the credit limit within a reasonable timeframe (ASIC has determined this to be three years). If they didn't properly assess this, the contract might be considered unsuitable.
  • Financial Hardship: If you're facing genuine hardship (like illness or unemployment) that makes it hard to meet your credit card payments, you have the right to ask the credit provider to change the terms of your contract. This could involve extending the repayment period, delaying payments, or reducing the amount you have to pay.
  • Cancellation: You have the right to cancel a credit card contract.
  • Seek Help: If you feel the contract is unfair, or you're struggling to reach an agreement with the credit provider, you can contact the Australian Financial Complaints Authority (AFCA) for free, independent dispute resolution. You can also seek legal advice or contact ASIC for information.
  • Free Credit Report: If you've been declined for a credit card (or other credit) within the last 90 days, you're entitled to a free copy of your credit report. It's a good idea to check this for accuracy.
  • Responsible Lending: Credit providers have to follow responsible lending practices.

Detailed Explanation

Based on the provided legislative context, here's a more detailed explanation of your rights:

  • Unsuitability: Under the National Consumer Credit Protection Act 2009, licensees (credit providers) must not provide credit assistance if the credit card contract is unsuitable for the consumer. A credit card contract is considered unsuitable if the consumer is unable to comply with the financial obligations under the contract, or could only comply with substantial hardship (sections 118, 119, 123, 124, 131, 133).
  • Financial Hardship: If you are unable to meet your obligations under the credit contract due to hardship, you may give the credit provider a hardship notice as per section 72 of the National Consumer Credit Protection Act 2009.
    • You can request changes to your contract such as extending the term, delaying payments, or postponing action against you (Form 12—Information about debtor’s rights after default, National Consumer Credit Protection Regulations 2010).
    • The credit provider must provide a written notice within 21 days stating whether or not they agree to the change. If they agree, you will receive a written notice detailing the agreement within 30 days.
  • Termination: You have a "credit card termination entitlement" under the Treasury Laws Amendment (Banking Measures No. 1) Act 2018. The credit provider must allow you to terminate the contract (section 133BT). They must also provide an online capacity to request termination (section 133BU) and cannot suggest you not terminate the contract (section 133BV).
  • Dispute Resolution: If you believe your contract is unjust, you should first talk to your credit provider. If that's unsuccessful, you can contact the AFCA scheme, a free service for resolving complaints (National Consumer Credit Protection Regulations 2010). You can also seek legal advice or contact ASIC for information.
  • Credit Reporting: If your application for credit was refused based on credit reporting information, the credit provider must give you a written notice explaining your right to access your credit reporting information without charge within 90 days (Privacy (Credit Reporting) Code 2025).
  • Responsible Lending: The National Consumer Credit Protection Act 2009 places responsible lending obligations on credit providers. They must make reasonable inquiries about your financial situation and assess whether the credit card is suitable for you.
  • Consumer Data Right: The Consumer Data Right (Non-Bank Lenders) Designation 2022 gives you more control over your data and may help you find better products.

I hope this helps clarify your rights!