12° Nicosia,
30 May, 2024

EU passes borrower protection law: Your rights when borrowing money

Clear rules to keep borrowers safe and informed


The European Parliament (EP) has voted on rules to keep people safe when they borrow money for things like credit cards or loans.

These rules, called the Consumer Credit Directive (CCD), were agreed upon in December 2022 between the EP and other EU groups. They aim to make sure that borrowing money is fair and safe for everyone.

Here's what these rules mean:

1. Checking If You Can Repay: Before giving you a loan or a credit card, the lender has to make sure you can pay it back. This helps prevent people from borrowing too much and getting into financial trouble.

2. Protection for Cancer Survivors: If you've had cancer and you need to borrow money with insurance, these rules protect you. They make sure your past illness doesn't make your insurance too expensive.

3. Regulating Lenders: Companies that lend money and those that connect borrowers with lenders must follow these rules. They'll be checked by national authorities to make sure they're doing things right.

4. Clear Warnings: If you see an ad for borrowing money, it has to clearly say that borrowing costs money. This helps you understand what you're getting into.

5. Controlling Overdrafts: If you use overdrafts or credit, these rules will make sure you're not charged too much. They aim to keep you safe from unfair fees.

6. Your Rights: You have the right to change your mind and cancel a loan within 14 days. You can also repay it early if you want. The rules explain how to calculate the cost if you do that.

The person in charge of these rules, Kateřina Konečná, said they are important because they protect people who borrow money. She pointed out that cancer survivors will not be treated unfairly when they need to borrow insurance. She also emphasized the need for clear warnings in ads about borrowing costs.

These rules will start in about 20 days, and countries in the EU have up to two years to make sure they follow them. After that, they have three years to start using them.

[Information sourced from CNA]

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