On November 3, 1988, President Reagan signed the Fair Credit and Charge Card Disclosure Act (FCCCDA), a federal law that aims to improve the transparency of credit card pricing and simplify credit card shopping. While the centerpiece of the act is the tabular credit card price disclosure commonly referred to as the “Schumer Box,” a lesser known provision of the law requires the Board of Governors of the Federal Reserve System to “collect, on a semiannual basis, credit card price and availability information…from a broad sample of financial institutions” and make such information “available to the public upon request.” Congress inserted this provision into the FCCCDA because it believed such pricing information would aid consumers in finding the best credit card deals and encourage issuers to compete against each other. The Senate report that accompanied the bill explained, “[i]t is anticipated that newspapers and consumer groups will use this information to inform consumers about the virtues and vices of different cards.”

Pursuant to Congress’ mandate, every January and July select credit card issuers throughout the U.S. provide the Federal Reserve System with interest rate and fee information for their most popular credit card plan open to new customers. This survey information is ultimately published on the Federal Reserve Board’s website as part of a step-by-step shopping guide that aims to assist consumers in choosing a credit card.

This paper analyzes the pricing information collected from issuers pursuant to the 1988 TILA amendment and considers two questions: Does the pricing information help consumers shop for credit cards? Does the pricing information help researchers better understand credit card pricing terms and trends? This paper is organized around these questions and proceeds as follows: Section II describes the pricing data and how they are collected from credit card banks pursuant to the 1988 federal law. Section III examines the usefulness of the TCCP-based pricing and terms survey made available to consumers over the Internet. It discusses how the credit card industry has changed since passage of the FCCCDA and how these changes affect the efficacy of the survey. Section IV evaluates the usefulness of the card pricing survey data to researchers. It attempts to determine whether the pricing data represent a reliable proxy for the actual prices card issuers are charging consumers. Section V concludes that the survey data are becoming less useful for consumers and researchers because of changes in the industry.

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PDF Ebook Is the Semi-Annual Pricing Data Reported by Credit Card Issuers to the Fed Helpful to Consumers or Researchers?