The Federal Reserve banks fulfilled a little-discussed requirement of the Credit Card Accountability, Responsibility and Disclosure Act when they posted online last week the credit card agreements of more than 300 of the nation's top issuers.
However, the usefulness of the database to consumers is dubious at best, observers say. The Fed's consumer credit card agreements search site lets people select an issuer and shows them the issuer's various credit card agreements.
But looking for details on a specific card from one issuer calls up long lists of card agreements, filled with dense legal language that may seem to have little direct connection to specific card products.
"If this is supposed to help consumers, candidly, it falls short," said Bill Hardekopf, the chief executive of the credit card-comparison website LowCards.com. "You'd have to search through dozens of different card agreements for each issuer to find your product, and even then I'm not sure if you could be sure if that's the latest version of the agreement."
A search for JPMorgan Chase & Co.'s Chase Bank USA card yields 28 card agreements with no obvious link to a specific card.
A Citigroup Inc. Citibank card search turns up 48 agreements.
A search for Nordstrom Inc.'s Nordstrom FSB card yields one 18-page agreement, but key product features such as interest rate and fees are difficult to find.
The Fed unveiled the search tool on May 24 in accordance with the Credit CARD Act. The law requires that each issuer post its card agreements online and supply online versions to the Fed, which "shall establish and maintain on its publicly available Internet site a central repository of the consumer credit card agreements" it receives. The Fed is to update card agreements on the site quarterly.
Lawmakers clearly hoped the law and its disclosure requirements would eliminate some card issuers' little-publicized fees. A provision of the law that requires issuers to make essential terms and conditions plain on monthly statements has been deemed useful, but card-comparison site experts agree the Fed's new card-search site offers little value. The Fed did not reply to requests for comment.
"I'm sure the Fed's intention was good, but in fulfilling the letter of the law they didn't really address the spirit of the law," said Ben Woolsey, the director of consumer marketing at CreditCards.com. People "are not helped by pages of legal documents not easily linked to a specific product."
CreditCards.com, which was started in 2005, supplies snapshots of the terms and conditions of up to 200 credit cards' features, updated daily. The site, which Woolsey said attracts more than 1 million visitors a month, earns a fee when a person is approved for a card found there.
LowCards.com, started in 2008, also supplies snapshots of terms and conditions, in its case of more than 1,000 U.S. credit cards, updated "several times weekly," Hardekopf said. LowCards earns fees when people are approved for cards featured on the site.
The nonprofit National Foundation for Credit Counseling supported many aspects of the CARD Act. It urges that people read their card agreements, but a representative said the Fed's card-search site lacks a "user-friendly" touch. "We live in an instant society," she said, "and if there are any initial barriers to finding the information, the consumer will move on."