Senators Introduce Credit Card Safety Star Act

Senators Ron Wyden and Barack Obama (D-Ill.) recently introduced legislation known as "The Credit Card Safety Star Act of 2007", which would create a five-star safety rating system for credit cards in order to increase the transparency of credit card agreements, according to The legislative proposal is an attempt to encourage credit card issuers to abandon what are considered abusive practices by offering consumers fair terms they can understand.

Much like the five-star crash test rating system for new cars, the bill requires every credit card, billing statement, agreement, application and piece of marketing material to carry the credit card’s safety star rating with five stars representing the safest cards. Cards would be awarded stars based on a points system, with cards earning points for consumer-friendly terms and losing them for terms that tend to get consumers into trouble.

Under this rating system, most of the cards available today will rate an average of only one or two stars, according to Wyden. The Safety Star program would be administered by the Federal Reserve and periodically reevaluated and updated based on market innovations and the program’s effectiveness.