The CFPB has announced that it has made changes to its semi-annual survey of credit card terms. According to the CFPB, the changes are “designed to increase price competition in the credit card market by allowing people to comparison shop for the best prices and products.”
The Fair Credit and Charge Card Disclosure Act of 1988 requires the CFPB to collect data semi-annually from the largest 25 credit card issuers and at least 125 additional issuers selected by the CFPB based on geography and other considerations. In addition to making changes to the survey data that it collects, the CFPB will allow issuers who are not part of the top 25 issuers or the 125 sampled issuers to voluntarily submit data about their credit card products.
The survey changes include the following:
- Additional questions will be added about a credit card’s annual percentage rate. If a card’s APR varies by credit score, issuers will be required to report the minimum and maximum APR offered, as well as the median APR offered by certain credit score tiers.
- The top 25 credit card issuers will be required to provide information about all of their credit cards instead of their most widely-used products while all other issuers will have the option to submit information about multiple products.
- Additional questions will be added about credit card terms, such as questions about whether the product is a secured card or requires a deposit for account opening, promotional terms of balance transfers, introductory rates, and cash advances.
According to the CFPB, the changes will help consumers “easily identify” lower interest rates and provide smaller credit card issuers “the opportunity to share more information to consumers about their credit card offerings and allow them to compete with bigger players.”
In recent remarks, CFPB Deputy Director Martinez described credit card late fees as “a fee that has skyrocketed from a small corner of the market to the top of everyone’s most hated junk fee list.” However, according to the CFPB, as described in its recent “Junk Fees Special Edition” of Supervisory Highlights, junk fees are “unavoidable or surprise charges [that] are often hidden or disclosed only at a later stage in the consumer’s purchasing process or sometimes not at all.” Not only are late fees obviously avoidable, they are hardly “surprise” or “hidden” charges. In addition to the Regulation Z requirement for issuers to disclose late fees in their credit card application and account-opening disclosures, late fees are among the fees that issuers must report as part of the survey. The CFPB touts the survey results as “a key tool to facilitate credit card shopping by consumers and to enhance competition.” Rather than indiscriminately branding late fees as “junk fees,” the CFPB should be making consumers aware that information about late fees is provided in the disclosures they receive from issuers and in the CFPB’s survey results.
Although the CFPB has stated an intent to help consumers easily compare terms across credit cards and to easily identify “junk fees,” it is not clear how the CFPB decides what information to present in the public dataset. Specifically, there are instances in which card issuers are requested to provide a range of interest rates and late fees in the survey of credit card terms, yet the dataset presented to the public shows only one rate or fee. It may be the CFPB’s approach to include the highest rate or fee for simplicity, but this approach would not best serve the goal of helping consumers to compare terms.