CFPB Cautions Credit Card Companies About Transparency in Promotions

On Thursday, June 8, 2017, the CFPB announced it had sent letters to top retail credit card companies encouraging the use of more transparent transactions. The letter addresses the agency’s concerns with retailers using deferred-interest promotions for credit cards.


“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 report raised several issues with deferred-interest promotions, including: 

  • Consumers paying more than the promotional balance: More than half of the people who incur deferred-interest charges and have other purchases on the account pay more than the full amount of their promotional balance during the promotional period. More than one third pay more than 150 percent of the full amount of their promotional balance during the promotional period.  
  • Many consumers may be able to meet the terms of the promotion but fail to do so within the set time period: The 2015 CFPB study found that many consumers who do not repay the promotional balance within the promotional period do pay off the remaining amount of the balance and the deferred-interest charges shortly thereafter. This suggests that the interest charges may have caught consumers by surprise.