CLEVELAND – The Consumer Financial Protection Bureau is testing a prototype credit card agreement at Pentagon Federal Credit Union that is designed to use simpler, plain language so consumers have a better understanding of the terms.
According to the CFPB, the new agreement has approximately 1,100 words, significantly fewer than the average card agreement, which as five times as many.
At a news conference in Cleveland, the CFPB announced the simplified card agreement as latest “Know Before You Owe” project. In addition to testing the new language with members of Pentagon Federal, the agency will also post its prototype credit card agreement on its website for public comment (
“Credit cards can be complicated, with many moving parts that impact the cost to consumers,” said Raj Date, the Special Advisor to the Secretary of Treasury on the CFPB. “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 agency said the new draft credit card agreement has an easy-to-read layout and is organized into three simple sections: costs, changes, and additional information. The prototype also seeks to establish standard definitions for legal terms such as “card” and “balance transfer” that are contractually necessary but largely uninformative to consumers.
Pentagon FCU has more than 1 million members, 350,000 of whom are cardholders. The $15.8-billion PFCU is one of three credit unions large enough to fall under the supervision of the CFPB.
