In the past, many consumers have said that sometimes when they run into credit card debt they cannot keep under control, it’s because they found their credit card agreement to be too confusing. But now, many banks are working to help with that common issue.
Major national banks including JP Morgan Chase are now making it easier for consumers to understand the terms of their credit card accounts, according to a report from the Columbus Dispatch. They’re doing so by issuing agreements that have plainer language than the previous documents, which were usually full of legal and industry jargon, as well as by significantly cutting the length. Many are also doing this with their checking account agreements as well.
“It’s time to empower consumers,” Susan Weinstock of Pew Health Group told the newspaper. “One of the ways is to provide information to them that is clear, precise and understandable.”
This move has likely come as a result of the suggestions from the new federal Consumer Financial Protection Bureau, which is now testing its own simplified credit card agreement, the report said. This document, which could become a requirement across the entire lending industry, is about 1,100 words long, compared with the current average of more than 5,000. The CFPB is testing its document at the Pentagon Federal Credit Union, which has more than 1 million members and 350,000 credit card holders.
In fact, setting up these types of documents for all types of consumer credit, not just credit cards, is one of the CFPB’s goals. Already it has drafted several different types of disclosure documents for consumers seeking a new mortgage, and others may be on the way soon. In addition, it has also endeavored to set up an online database of all credit card offers available nationwide so that consumers have a better idea of what types of cards are available to them.
The CFPB, under the direction of top executive Richard Cordray, gained full regulatory power over the lending industry in July and also set up both a website and a hotline where consumers could report concerns or ask questions about their credit card accounts. In many cases, the content of those calls is then forwarded to the lender in question so that the issues can be addressed.