Opposing view: We support simplicity

Issuers working with regulators to make disclosures easier to read.

By Ed Yingling

With credit cards practically a necessity in today's marketplace, it's critical that consumers know how to use them. That's why the credit card industry is engaged in an effort, spearheaded by the Federal Reserve, to simplify and humanize the language we use. More important, this effort won't consist of lawyers and regulators imagining how consumers might react. The new disclosures will be tested with real, live consumers.

Simpler won't be easy. As a recent study by the Government Accountability Office (GAO) points out, the legalese in credit card disclosures results from issuers' need to meet statutory requirements and their desire to avoid being sued. (Read USA TODAY's view)

So, there's work to be done on the disclosures — and we're doing it. Credit card lenders fully support the Federal Reserve's effort to make disclosures easier to read and understand so that consumers can make informed decisions.

The GAO report also reveals many positive credit card trends.

Up until 1990, credit cards charged a higher, fixed interest rate, often came with an annual fee and were available to only the most credit-worthy consumers.

Today, technology and competition have helped make cards available to many more people, at a price consistent with the risk each person presents.

The result is that the majority of cardholders — 80%, according to the GAO study — enjoy interest rates below what they would have paid 15 years ago. And interest rates are effectively zero for about half of all account-holders, who pay their balances off each month.

Furthermore, the GAO found that cardholders paid 66% less in annual fees in 2004 than they did in 1990. It also concluded that most cardholders don't appear to be paying penalties, such as late or over-the-limit fees, which are avoidable.

Credit card customers have never had more choices or lower interest rates than they do today.

Broader access to credit for more people at lower rates — we think that's progress.

Ed Yingling is president and CEO of the American Bankers Association.