A simple credit card agreement has been unveiled by the U.S. Consumer Finance Protection Bureau. It says could be easier for consumers to understand.
Created by the Dodd-Frank Wall Street Reform and Consumer Protection act, the new agency said it wants public feedback on the form, part of the "Know Before You Owe project aimed at simplifying credit card agreements so that the prices, risks, and terms are easier for consumers to understand," UPI.com reported.
The form is short, straightforward, consumer-friendly and consistent, the agency said. It has 1,100 words, compared to the average commercial agreement, which has around 5,000 words, the bureau said in a release on Friday.
"The prototype establishes standard definitions for legal terms like 'card' and 'balance transfer' that are contractually necessary but largely uninformative to consumers," UPI quoted the CFPB as saying in a statement.
In 2010, there were 514 million credit cards in circulation, and $1.9 trillion was spent using credit cards, the CFPB said.
Despite this, "a recent study by J.D. Power found that roughly two-thirds of cardholders say they don't completely understand how their cards work," UPI quoted the bureau as saying.
The CFPB plans test the new agreement in a pilot program with the Pentagon Federal Credit Union, which has 350,000 credit card holders.
