EU tightens credit rules: consumers must be informed

As of: November 19, 2023 4:31 p.m

How much does the borrowed money cost? Consumers in the EU now have the right to better information about credit. This is intended to better protect low-income households in particular.

It is a word monster that is not atypical for the EU bureaucracy: consumer credit directive. The aim of the directive that came into force today is to provide better information about credit. Banks are affected, but also online platforms that lend small sums, as well as “buy now pay later”, which are enjoying growing popularity in online trading.

Citizens in the EU need to be clearly and understandably informed about loans – for example how much it costs to borrow money. Harmful advertising is banned – for example if it is suggested that loans could improve customers’ financial situation. The EU wants to protect low-income households in particular from excessive debt.

“Crowdlending” is also affected

According to EU countries, there are also stricter regulations on advertising and measures against overcharging. According to the information, banks and other lenders need to do a better job of checking whether people can actually afford the loan and repay it later.

In addition, consumers should be able to withdraw from credit agreements within 14 days without giving reasons.

The stricter rules now also apply to more forms of credit, such as loans under 200 euros and when citizens borrow money via online platforms – so-called crowdlending. Online purchases for which consumers have to pay later are also subject to the new rules. Whether all the rules are implemented is partly left to the member states themselves. In general, Germany and the other EU states must implement the requirements into national law within two years. The new directive replaces a set of rules from 2008.

With information from Paul Vorreiter, ARD-Brussels

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