A federal online tool is taking strides to provide consumers with a better way to compare credit card products. The new survey reporting aims to create transparency for consumers to make the best-educated decision when comparing credit cards in today’s inflation climate.
Federal Online Tool Enhances Card Comparison Transparency
The Consumer Financial Protection Bureau (CFPB) is working on a new tool to help the public make better judgments when comparing credit card rates and benefits. The efforts in providing credit card transparency aim to give people a helping hand during rising interest costs.
A federal government-led survey has required the 25 largest credit card issuers and 125 other institutions to provide new biannual data as a contribution to the Terms of Credit Card Plans (TCCP) Survey. These efforts have been ongoing for the past 30 years. Its mission is to help consumers make informed decisions when assessing credit cards.
The tool has not had any significant updates in the past 30 years, making it feel outdated in today’s world. The information provided in the survey was often too general for the average consumer. In 2023, the average credit card interest rate has been on the fastest rise, headed toward a 20% hike. The new and improved Federal online tool may be the first move to more transparent credit card comparisons.
Lower Interest Rates & Better Comparisons
The CFPB has begun requesting orders for select card issuers to submit the required reports as part of the TCCP Survey. The new changes for the information order mean CFPB is summoning more details on the plans credit cards offer. As part of the updated improvements, the terms of credit card plans survey will include updates that will help consumers easily identify noteworthy credit card differences. Including the following:
- Lower interest rates
- Realistic interest rates
- Credit card products that best-fit consumer needs
With the growing interest rates, consumers need to have easily digestible resources for a better understanding of their credit card options. With the new updates, institutions with relationship banking models will have a better chance of competing with more prominent credit card issuers. The smaller institutions tend to offer lower rates anyways but often get overlooked.
Credit Score Requirements and APRs
In addition to lower interest rates, the survey has updated questions regarding real interest rates, also known as the Annual Percentage Rate (APR). If a credit card’s APR varies by credit score, the issuer must submit additional information to clarify the minimum and maximum APR offers, including the median APRs. Adding the median APR data will help consumers make better comparisons based on their credit scores when choosing a new credit card.
Furthermore, the updates that will help consumers easily identify the credit card products that best fit their needs will be beneficial. The top 25 card issuers will have to answer questions for all their credit card products instead of just their most popular ones. All other institutions can voluntarily submit information on multiple products to their liking. The survey will contain more questions, like whether the product is a secured card or requires a deposit. There are also questions about promotional terms of balance transfers, introductory rates, and cash advances.
“The Fair Credit and Charge Card Disclosure Act of 1988 requires the semi-annual collection of data from the largest 25 issuers of credit cards and at least 125 additional institutions in a manner that ensures equitable geographic distribution within the sample and representation of a wide spectrum of institutions. The results of the semiannual terms of credit card plans survey are a key tool to facilitate credit card shopping by consumers and to enhance competition.” Source: CFPB
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