Consumer agency unveils simplified credit card agreement

The Consumer Financial Protection Bureau unveiled its proposal for a simplified credit card agreement form designed to make it easier for consumers to understand interest rate terms and comparison shop.

“Credit cards can be complicated, with many moving parts that impact the cost to consumers,” Raj Date, the agency’s acting director, said at a Cleveland news conference Wednesday.

“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,” he said. “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 proposed two-page agreement, which banks and other issuers would provide to consumers seeking cards, is about 1,100 words long — much shorter than the 5,500-word average industry agreement, the agency said.


The new form highlights in large type the actual costs, such as the annual percentage interest rate on purchases, cash advances and balance transfers. It uses plain language to explain other items, including how the interest rate is calculated, why late fees are assessed and how billing disputes are handled.

The agency is seeking public input on the form through its website and also plans to run a test of the proposed form with customers of the Pentagon Federal Credit Union, one of the nation’s largest credit unions.

The simplified agreement is similar to one the agency is proposing for mortgage disclosure forms. Both are part of the consumer bureau’s Know Before You Owe project.

The American Bankers Assn. said the proposed form was a good first step “but could be made even shorter.”


The group will work with the agency to “ensure disclosures provide exactly what our customers need and want to know, while maintaining consumer access to competition and choice in the marketplace,” chief counsel Kenneth Clayton said.

Credit cards are one of the main areas of focus for the agency, which began operations in July. It said last week that it had received more than 5,000 complaints about credit cards through Oct. 21, which showed consumers were struggling to understand terms and conditions.

Wednesday’s announcement comes amid a push by the Obama administration over the last week to get the Senate to confirm the nomination of former Ohio Atty. Gen. Richard Cordray to be the agency’s first director. Nearly all Senate Republicans have been blocking Cordray’s nomination because they want the administration to agree to changes to reduce the bureau’s power.

The White House has been trying to pressure some Senate Republicans to stop blocking the nomination. The Senate plans to vote Thursday to try to overcome the filibuster, although Republicans are expected to prevail.

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