Banking, finance, and taxes

The Case That Credit Card Agreements Are More Confusing Than Skyscraper Architect Drawings

Douglas A. McIntyre

Published: September 8, 2016 9:45 am

Last Updated: January 13, 2020 3:49 am

CreditCards.com has posted a study that shows that credit card agreements are so complex that people need an education well beyond what most Americans attain. The point is that your bank or credit card issuer has you over a barrel when it comes to your side of the bargain. They win, you lose.

Among the conclusions, the most depressing one:

Most credit card agreements are beyond the reading ability of the average U.S. consumer, according to a new CreditCards.com report.

CreditCards.com analyzed more than 2,000 card agreements and found they’re written at an 11th-grade reading level on average. About half of consumers read at a ninth-grade level or below.

In 2011, the Consumer Financial Protection Bureau launched an effort to cut the length and complexity of credit card contracts. It has been mildly successful: back then, CreditCards.com found the average credit card agreement was written at a 12th-grade level and included about 5,400 words. The current average is 4,900 words, which takes a typical adult about 20 minutes to read.

Since the reading level among Americans is generally believed to be worsening, the banks only need to keep their agreements as complex as they are now. The banks are gaining as their customers fall back.

In a related piece of the research

CreditCards.com found 46% of credit cardholders “never” or “hardly ever” read the legal agreements that come with their cards. Among those who have read the agreements and were asked to describe them in one word, 71% chose a negative word, most commonly “lengthy” and various synonyms such as “long,” “wordy” and “verbose.”

From that standpoint, many people are their own worst enemies, regardless of their ability to read.