Bailout

Trying to read credit-card agreements

By Felix Salmon

How long will it take to get readable credit-card contracts? My guess is somewhere in 2012, if we’re lucky. Right now, although we’re moving in the right direction, we’re also moving far too slowly:

In a follow-up to its July 2010 credit card agreement readability study, CreditCards.com looked at the 20 most difficult to read and the 20 wordiest contracts to see if any had improved between July and October. Only six of the 20 most difficult-to-read contracts showed improvement. Nine of the 20 had the same reading level, three were more difficult to read and two were no longer offered by the credit card issuer. All were still rated at the 12th grade reading level or higher — too difficult for four out of five adults to understand.

To give an idea of what we’re talking about here, take a look at Fifth Third’s credit card agreement. For one thing, it’s 15 pages long. And for another, it includes crystalline passages like this:

I’m using an image here, rather than quoting in text, to show that banks have made no graphical concessions to readability at all: prose is presented in dense paragraphs, in the kind of hard-to-read narrow sans-serif text which just screams “don’t read me.”

And of course there’s no point in reading this kind of thing: I doubt one cardholder in a hundred could even begin to say what it means to “honor claims of privilege recognized at law.” I certainly couldn’t.

To put this in context, check out this two-pager from the University of Illinois Employees Credit Union. It leaves something to be desired in terms of graphic design, and parts of it could be cleared up a bit, but there’s certainly no gratuitous legalese. It’s possible, bankers! Don’t let the lawyers stop you!

Full post as published by Macroprudential on November 23, 2010 (boomark / email).