CFPB rewrites credit card fine print
The Consumer Financial Protection Bureau wants customers to understand their credit cards better. So, they've unveiled a new and shorter prototype of a credit card agreement.
Kai Ryssdal: There could be a vote in the Senate tomorrow on the fate of the Consumer Financial Protection Bureau. Of who's going to run it, more accurately.
The White House wants the Senate to confirm former Ohio Attorney General Richard Cordray to the job. Republicans have said they'll block any one person that's named to run the place -- they want a committee of five.
But there are some things the CFPB is doing in the meanwhile. Today, the bureau unveiled a prototype (PDF) for a new, standardized credit card agreement. In plain, actual English!
Marketplace's Nancy Marshall Genzer reports.
Nancy Marshall Genzer: I would rather eat dirt than read my credit card agreement. It took this assignment, and a strong suggestion from my editor, for me to find it online, print it out and read it. Starting with the rules on rates for cash advances.
Marshall Genzer: All right, 19.24 percent for Elite and Premium Pricing or 23.24 percent for Standard Pricing. I don't get that.
There was a lot I didn't get. So I wasn't surprised to hear the CFPB say that two-thirds of card holders don't understand the terms of their credit cards, because of the way they're written.
Raj Date, the Treasury official who's temporarily running the CFPB, says the prototype is only two pages.
Raj Date: We've taken away the fine print and legalise. And we've re-ordered the most important information so it's easy for consumers to see.
The CFPB is asking banks for input, but they aren't required to use the new form.
Elise Brooks is with the Financial Services Roundtable.
Elise Brooks: Obviously, this is a new proposal. We'll have to drill down into the details.
Details like whether a standardized contract would limit a bank's financial offerings, or increase the risk of lawsuits.
Ira Rheingold: Oy vey iz mir.
Ira Rheingold heads the National Association of Consumer Advocates. He says banks will complain about the standardized agreement because it'll be easier to compare credit cards. But eventually, they'll adopt it.
Rheingold: Once this becomes sort of standard fare, the credit card company that chooses not to use this type of contract with be looked on with disfavor by a lot of consumers.
But you'll only benefit from a standardized agreement if you actually read it. Rheingold says the prototype agreement is designed for the educated consumer who likes to shop around.
In Washington, I'm Nancy Marshall Genzer for Marketplace.