I’m sure there’s someone out there who eagerly awaits the arrival of their credit card agreement so they can devour each word with rapt attention. (Actually, we know at least one person who freely admits to being obsessive about the fine print, and we love her for it.) But if you’re like millions of other credit card-carrying Americans who immediately file the unopened agreement in a slush pile … that eventually makes its way to the trash (hopefully by way of a shredder), the Consumer Financial Protection Bureau created a little something with you in mind.
[Related article: Report Finds Consumers Confused by Credit Card Terms]
The CFPB revealed yesterday what it hopes to be the future of credit card agreements—or the beginnings of it, anyway. The bureau designed a prototype of a 2-page snapshot of credit card terms, in an effort to bring greater clarity and simplicity to the labyrinthine document issuers typically send out. The bureau says it believes that simpler contracts will help consumers have a better understanding of their credit cards.
“I love the idea of standardized notices. If banks actually adopt this, it will make it a heck of a lot easier to understand and compare cards,” says Gerri Detweiler, Credit.com’s debt expert. “I also think standardized definitions make it easier for cardholders to understand what they are getting. Right now, you need a law degree to read some credit card agreements.”
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The 2-pager highlights costs (interest rates, fees, payments, etc.), what would cause increases or decreases in those costs, and other good stuff like privacy, your rights, the issuer’s rights, and billing disputes. It’s also accompanied by a rather lengthy glossary of the language in the 2-page agreement. (Detweiler says she thinks some of the CFPB’s glossary could be made even simpler.)
The bureau says the prototype is a work-in-progress and is asking for consumer feedback. It says that the mock-up will not be mandatory for credit card issuers—just a suggestion—and will field-test it with one government credit union to further refine it.
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