The Federal Reserve this week fulfilled a little-discussed requirement from the Credit Card Accountability, Responsibility and Disclosure Act when it displayed online the credit card agreements of more than 300 of the nation’s top issuers. But the database’s usefulness to consumers is dubious at best, observers say.
The Fed’s online “Consumer Credit Card Agreements Search” enables consumers to select an issuer and search for its credit card agreement. However, a search for a card through a specific issuer turns up long lists of card agreements comprised of dense legal language with no direct connection to a specific card product.
“If this is supposed to help consumers, candidly it falls short,” Bill Hardekopf, CEO of the credit card-comparison website LowCards.com, tells PaymentsSource. “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 a JPMorgan Chase & Co. Chase Bank USA card yields a list of 28 different card agreements with no apparent connection to a specific card. A Citigroup Inc. Citibank card search turns up 48 different agreements. A search for Nordstrom Inc.’s Nordstrom FSB card yields only one 18-page agreement, but key product features such as interest rate and fees are difficult to pinpoint within it.
The Fed on May 24 unveiled the search tool, in accordance with the Credit CARD Act. The law requires that each issuer post its card agreements online and provide online versions of the agreements 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 will update card agreements on the site quarterly, it said in a statement issued this week.
Lawmakers clearly hoped the law and its disclosure requirements would eliminate certain card issuers’ seemingly hidden fees and traps. And while another provision of the law requires issuers to make essential terms and conditions plain on monthly statements has been deemed useful, card-comparison site experts agree the Fed’s new card-search site provides little of value to consumers.
“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,” Ben Woolsey, director of consumer marketing for CreditCards.com, tells PaymentsSource. “Consumers are not helped by pages of legal documents not easily linked to a specific product.”
CreditCards.com, launched in 2005, provides neutral snapshots of the terms and conditions of up to 200 credit cards’ features, updated daily. The site, which Woolsey says attracts more than 1 million visitors each month, earns a fee when consumers are approved for a card found on its site.
LowCards.com, launched in 2008, also provides neutral snapshots of the terms and conditions of more than 1,000 U.S. credit cards, updated “several times weekly,” Hardekopf says. LowCards earns a fee when consumers are approved for cards featured on the site.
Bankrate.com also offers a credit card-comparison site with snapshots of key card features, including terms and conditions.
The nonprofit National Foundation for Credit Counseling supported many aspects of the Credit CARD Act. But while the foundation recommends that all consumers read their card agreements, the Fed’s card-search site lacks a “user-friendly” touch, a spokesperson tells PaymentsSource.
“We live in an instant society, and if there are any initial barriers to finding the information, the consumer will move on,” the spokesperson says.
The Fed did not provide a comment on its site by CardLine deadline.
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