Consumer Credit Protection Act Of 1968

Federal legislation that created disclosure requirements that must be followed by consumer lenders such as banks, credit card companies and auto-leasing firms. Pursuant to the act, consumer lenders were required to inform consumers about annual percentage rates (as opposed to the stand-alone interest rate), special or previously hidden loan terms and the total potential costs to the borrower.

The consumer credit protection act of 1968 was important in that it made the terms of loans more transparent to borrowers who may not be as well-versed in finance. For example, showing a borrower the annual percentage rate (APR) of interest will bring to light that if the loan stipulates a 10% interest rate (annual percentage yield (APY)) paid monthly, the borrower will actually be paying closer to 10.5% on the loan over the year.


Investment dictionary. . 2012.

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