Bureau to Examine Effectiveness of Credit Card Counseling For At-Risk Consumers
WASHINGTON, D.C.– Today, the Consumer Financial Protection Bureau (CFPB) announced a Project Catalyst research pilot to examine the effectiveness of early intervention credit counseling for consumers who are at risk of default on their credit card debt. The research can help improve understanding of strategies that may help consumers struggling with credit card debt avoid defaulting and harming their credit reports. The initiative will inform the Bureau’s work and support its mission to empower consumers to lead better financial lives.
“Managing credit card debt can be stressful for consumers and will affect their ability to access credit in the future,” said CFPB Director Richard Cordray. “This project can help us better understand what works and does not work to improve life for consumers in the marketplace.”
Many consumers who are struggling with credit card debt often do not seek help until their options are limited for avoiding default. Providing consumers struggling with debt with early access to resources such as credit counseling may be an effective strategy for financial educators, credit counselors, and others who aim to help consumers. However, currently there is limited research on the effectiveness of early-intervention credit counseling strategies.
As part of the CFPB’s Project Catalyst initiative, two institutions, Barclaycard and Clarifi, have agreed to share insights with the Bureau from a credit card credit counseling trial project. Their trial project will offer early-intervention credit counseling to consumers at risk of defaulting on their credit card debt. Barclaycard (Barclays Bank Delaware) is a global credit card issuer, and Clarifi (Consumer Credit Counseling Service of Delaware Valley), is a consumer credit counseling service provider based in Philadelphia, Penn. This effort will help inform the Bureau’s work to improve the financial outcomes of consumers.
The Bureau’s research pilot will explore whether certain early intervention strategies can improve consumers’ financial outcomes. This research may also help inform whether similar strategies could be effective for consumers facing default on other products such as home, auto or other loans. The information shared by Barclaycard and Clarifi will be de-identified, and appropriate precautions will be taken to ensure that individual consumers cannot be identified through the data.
The Bureau’s Project Catalyst initiative is designed to encourage consumer-friendly developments in markets for consumer financial products and services. The Bureau views this initiative as an important means of fulfilling its mandate under the Dodd-Frank Wall Street Reform and Consumer Protection Act to provide all consumers access to fair, transparent, competitive, and innovative markets.
More information about Project Catalyst will be available at: https://www.consumerfinance.gov/projectcatalyst/
The Consumer Financial Protection Bureau is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit consumerfinance.gov.