WASHINGTON (Legal Newsline) — The Consumer Financial Protection Bureau (CFPB) announced June 8 that it has sent letters to top retail credit card companies encouraging them to consider using more transparent promotions.
According to the CFPB, credit card companies often offer deferred-interest programs when selling their credit cards. However, they often surprise consumers with high, retroactive interest charges after the promotional period ends. The CFPB suggests using a zero-percent interest period instead, as this is more transparent for consumers.
“With its back-end pricing, deferred interest can make the potential costs to consumers more confusing and less transparent,” said CFPB Director Richard Cordray. “We encourage companies to consider more straightforward credit promotions that are less risky for consumers.”
The CFPB released a list of consumer tips about credit card interest rate programs, saying consumers need to be aware of different factors affecting the cost of borrowing, namely the length of the promotional period, the interest rate after the promotional period and the payment each month that will be needed to pay off the promotional period purchase.