We applaud Senator Ron Wyden, who today introduced the Credit Card Safety Star Act. This legislation establishes a simple, effective system that helps consumers compare the safety of individual credit cards. Each card will be rated between one and five stars based on a number of factors, including hidden fees, interest rate changes, and the alteration of terms in the agreement. Using this rating, consumers will be able to avoid predatory practices, and companies with fair terms and disclosures will be rewarded with increased business. Further, the rating system encourages credit card issuers to compete to offer the safest credit card, and at the same time does not stifle product innovation that can be beneficial for consumers.
The Center for American Progress has long advocated for an incentive-based disclosure system for credit cards. Credit card use has skyrocketed in recent years, and at the same time, consumer debt, fees assessed, and carried balances have increased. Consumers have not been given an accurate picture of the risks involved with their credit. We thank Senator Wyden for his efforts to provide consumers with the information they need to make smart credit choices.
For more information, see the CAP report "Safety Sells" here: http://americanprogress.org/issues/2006/11/safety_sells.html .
Tim Westrich is Research Associate at the Center for American Progress. He works primarily on the Economic Mobility initiative, which focuses on developing innovative solutions to address low-income households’ experience with housing, debt, and higher education.