As part of its ongoing efforts to create better credit card safeguards for consumers, the new government agency tasked with protecting Americans financially is asking for help from cardholders.
The new federal Consumer Financial Protection Bureau is once again seeking comment from the general public on how it should approach simplifying agreements between borrowers and lenders, according to a report from ABC News. It is doing so through an online survey – similar to one launched earlier this year to help the CFPB put together new mortgage disclosure forms – that takes about five minutes to fill out.
Already, it has put together a sample document that is being tested through the Pentagon Federal Credit Union, where members will be able to register their thoughts on the agreements after applying for a credit card from the financial institution, the report said. This could be a beneficial way to collect data because PFCU has credit card customers all across the country.
The new form make many of the terms of an agreement easier to understand by listing them in larger print than normal and reducing the amount of legalese with which many consumers might be uncomfortable, the report said. In addition, it reduces the amount of pages and words used in the average credit card agreement considerably. Currently, the average agreement is about 5,000 words long, and the proposed document from the CFPB is about 1,000, and is written at an 11th grade level so that more consumers will be able to understand it.
However, whatever the CFPB ends up adopting as the new credit card disclosure form may have a hard time reaching consumers, the report said. That’s because the documents will not be mandatory for credit card issuers to use. Instead, lenders will have to opt into its use, which leads many experts to believe that adoption will be slow, but that these institutions will eventually come around, as more try to gain a competitive edge by making their agreements easier for potential borrowers to understand.
The CFPB has made clarifying agreements between credit card lenders and consumers one of its top priorities since gaining full regulatory power, and will continue to work toward the goal of making all lending documents easier for Americans to understand so that they will be better educated about whether they can afford the line of credit.