Anyone who hand shreds unwanted credit card solicitations knows how thick those envelopes can be — with forms full of interest rates, fine print and unnavigable terms. The Consumer Financial Protection Bureau proposed a new, shorter form yesterday, so that you wouldn’t have to wade through pages full of credit jargon.
The L.A. Times says the CFPB’s goal of the simplified two-page forms would be to lay out interest terms in a more understandable, upfront way, and allow for consumers to comparison shop with ease.
“Credit cards can be complicated, with many moving parts that impact the cost to consumers,” said Raj Date, the agency’s acting director, at a news conference in Cleveland yesterday. “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. 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.”
Current forms average about 5,500 words, whereas the proposed agreements would come in at just 1,100 words. Instead of just paring down pages, the forms would focus on the actual cost to the consumers, in large type. Easier to understand language would explain when and why late fees would accrue, the process of calculating interest rates and more.
Consumers can weigh in on the new form on the CPFB’s site, and a credit union will also be testing out the agreements with their customers soon.