The Consumer Financial Protection Bureau announced it is now seeking public input on a credit card agreement that is simple for consumers to understand.
The form is concise and consumer-friendly, according to the bureau. It is less than 1,200 words, which is significantly shorter than the average commercial agreement, which runs 5,000 words, UPI.com reports.
“Credit cards can be complicated, with many moving parts that impact the cost to consumers,” Raj Date, the special advisor to the Secretary of Treasury on the CFPB, said. “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.”
The form clarifies definitions for legal terms such as “card” and “balance transfer” that are contractually necessary but for the most part uninformative to consumers, according to UPI.com.
Last year there were 514 million credit cards in circulation and $1.9 trillion was spent using credit cards. A new study conducted by J.D. Power showed that two-thirds of credit card holders admit to not completely understanding how their cards function.
The form will be tested in a pilot program with the Pentagon Federal Credit Union, which has 350,000 credit card holders, UPI.com reports. The CFPB is also looking for opinions on the form from the public at large.