The Consumer Financial Protection Bureau, or CFPB, has published a prototype credit card agreement. It is important to note that it is not a model form, and use is not mandatory. The CFPB believes its approach will help consumers better understand their credit card agreements.
The prototype credit card agreement separates important information about prices, risks, and terms from the legalese by taking much of the legal language and moving it into standard definitions. In the prototype, the definitions have been formulated by the CFPB based on standard industry usage and practices. To ensure that consumers can easily find these definitions, they will be housed online in a place where consumers can readily access them. For consumers who do not have Internet access, the definitions will be available from their issuer in printed form. Doing this allows for a plain language document that clearly explains to consumers how the credit card works.
The CFPB’s simplified agreement is intended to serve as a thought starter. The Bureau is testing the prototype with the Pentagon Federal Credit Union, which has more than one million member customers – including roughly 350,000 cardholders. The CFPB plans to continue to work with the Pentagon Federal Credit Union and other card issuers interested in making simplified credit card agreements an industry reality. The consumer agency is also inviting the public to weigh in on the prototype on its website.
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