Imagine a credit card agreement that's short, to the point and easy to understand. If one federal agency gets its way, what you're picturing could become a reality.
The Consumer Financial Protection Bureau launched a campaign aimed at simplifying credit card agreements Wednesday. The agency is asking the public for feedback on a more transparent credit card form that is broken down into three sections -- costs, changes and additional information -- and features information high up on fees, interest rates and other information.
The bureau will also be soliciting feedback through a pilot program that will offer the agreement to customers of the Pentagon Federal Credit Union.
"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," Raj Date, a special adviser to the Treasury said in a statement announcing the program. "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 announcement comes after a CFPB report analyzing more than 5,000 credit card complaints found that customers are confused by their credit card terms. The report also found that consumers are still complaining about interest rates, billing disputes and other issues, despite legislation passed in 2010 that aimed to make credit cards more transparent.
The complaint system was the first of its kind for the CFPB, which launched in July. The agency plans to expand the complaint system to all financial products starting with mortgages.
The bureau, which was created as part of the Dodd-Frank Financial Reform legislation, has been controversial since before its inception. Consumer advocates welcomed the agency as a necessary step towards preventing another financial fallout, while the financial industry and some lawmakers derided it as over-regulation.
The new credit card form may be coming at just the right time. Credit card purchases climbed more than 10 percent last quarter after an 8.6 percent increase and a 9 percent boost in the first and second quarters respectively, according to statistics from First Data. The findings may indicate that credit card use is edging up after consumers cut back on debt immediately following the recession.
Check out an early version of the CFPB's simplified credit card form: