CFPB creating simplified credit card form
A prototype of a simplified credit card agreement form was unveiled by the Consumer Financial Protection Bureau, which the agency created to make the documents easier for consumers to understand.
To help develop the form, the agency has asked for feedback from consumers – something the temporary head of the government agency, Raj Date, said should help them when looking to secure cards in the future.
“When a consumer has to read through pages of legal fine print in their credit card agreement to figure out how their card works — it’s easy to get confused,” said Date. “With a short, simple, easy-to-understand credit card agreement, consumers can clearly see the terms of the deal and make the decisions that are right for them.”
The revised agreement clarifies information including risks, terms and prices, and doesn’t contain the legalese often seen in credit card forms, which the agency states should make it easier for consumers to comprehend the language included in the form. These areas of the agreement were some of the most complained about aspects by consumers surveyed by the CFPB during summer.
This modified credit card agreement is the second prototype the CFPB has released as part of its “Know Before You Owe” initiative. Earlier this year, the agency revealed similar simplified documents regarding mortgage disclosure forms.
An official with a credit information website stated the new agreement form should be of great assistance to consumers who lack knowledge about the finer points of the document.
“If this can go into effect and doesn’t get squashed in the meantime, it will be a meaningful thing for consumers to have simple credit card agreements that are truly meant to communicate the terms of the account,” Ben Woolsey, director of marketing and consumer research at CreditCards.com, told ABC News. “Because in reality, credit card agreements in today’s world are strictly written to protect the banks from litigation and really make a cursory effect to communicate.”
While this form can help numerous prospective cardholders, many current credit card users need help managing their products better. A great way to do so may be to speak with a credit counselor.