Simplification of Consumer Disclosures

The Consumer Financial Protection Bureau (CFPB) and others have several efforts underway aimed at helping consumers better understand the terms, risks and pricing of various financial products. In a previous post, we mentioned the CFPB's "Know Before You Owe" initiative as relates to mortgage disclosures. This initiative is broadly focused on making potentially complex lending agreements more transparent and understandable for consumers. Recently, the CFPB released a simplified credit card agreement and is seeking consumer and card issuer feedback.

The latest Know Before You Owe credit card agreement features a two-page prototype detailing pricing information and key terms that consumers should know, presented in what is intended to be a simple, user-friendly manner. It also includes a multi-page document, which would be available online, that defines the credit card terms used in the two-page prototype.

The prototype form presents the credit card product terms in three sections: Costs, Changes and Additional Information. The Costs section, located at the top of the form, explains charges, interest rates, and related fees. The Changes section describes types of events that could trigger changes to the agreement. The Additional Information section contains the cardholder and card issuer rights, information on how billing and other disputes are handled, and a description of consumer privacy rights.

In addition to the CFPB's efforts, several consumer advocacy organizations have long called for simplified disclosures designed to assist consumers in making informed decisions about which financial products and services are right for them. The Pew Charitable Trusts has developed prototypes of consumer-friendly checking account disclosures and is now recommending that financial services providers adopt a similar layout to clarify terms in a format that is easy to read and understand. Such disclosures are intended to make it possible for consumers to compare offers and select the product that best fits their needs.

Citi has long supported efforts to simplify and standardize disclosures on a host of financial products and services, and we have endeavored to make our own disclosures as easy as possible for customers to understand. We believe that this allows consumers to look across the multiple products and services available to them from various financial services providers and helps them make informed decisions about which ones best fit their needs and budgets.

We encourage you to provide your comments and feedback to the CFPB on its proposed model credit card disclosure at https://www.consumerfinance.gov/credit-cards/knowbeforeyouowe/, as well as its proposed mortgage and student lending disclosures.

What do you think about the CFPB's credit card agreement prototype? What do you think of Pew's proposed checking account disclosures? Do you think these simplified disclosures will help consumers to make better, more informed financial decisions?

Other Reading Material:

Consumer Financial Protection Bureau: Know Before You Owe - Credit Cards

Consumer Financial Protection Bureau: Credit Card contract definitions

Pew Charitable Trusts study "Hidden Risks: The Case for Safe and Transparent Checking Accounts"