Better credit-term disclosures permit better-informed credit decisions and lead to more-intense competition among creditors. In a nutshell, effective disclosure empowers consumers to choose wisely and enhances competition. In some circumstances, the disclosure rules can facilitate efficient market outcomes by establishing guidelines to improve information flows and establishing uniform standards for how information is provided.
For example, since enactment of the Truth in Lending Act of 1968, which requires uniform disclosure of the cost of credit and other key lending terms, consumer awareness of and sensitivity to interest rates in credit decisions has increased.