Study: Credit Card Agreements Too Long And Hard To Understand

PITTSBURGH (KDKA) — Most of us use credit cards, but have you read the fine print of the agreements that govern those credit cards?

“No. Like I said, too long, too muddled. I don’t understand a lot of that,” said Katherine Haywood of Canonsburg.

It’s a common complaint.

“Totally hard to understand and ridiculous,” added Lorrie McGee of Butler.

“Reading the average credit card agreement is going to be a real challenge for a lot of folks,” Matt Schulz, senior industry analyst at CreditCard.com told KDKA money editor Jon Delano on Thursday.

Schulz studied 2,000 credit card agreements.

He found the average was 4,900 words, well above the government’s recommended 1,200 words, and the average document was written at an 11th grade level when most Americans read at a 9th grade level.

Locally, PNC uses 11,268 words and is readable at the freshman college level, the study found, while Citizens uses 10,076 words and is readable at a high school graduate level.

Schulz says it’s critical to know credit card terms.

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“If you don’t know what fees are associated with that credit card, for example, how are you going to work to avoid those fees?>>

In an informal test of how readable these credit card agreements are, KDKA printed out two agreements — one from PNC and one from Citizens Bank — and then took them over to Market Square to ask some folks to take a read.

“’Please refer to the interest rate and disclosures for the margins for any variable APR, daily periodic rates of interest and APRs that apply to your account,’” read Randall Caudillo of Homestead.

Delano: “Do you have any idea what you just read?”

Caudillo: “No, not really.”

“’Any variable APR that applies to your account equals the value of an index plus a margin,’” read Robin Collins of Neshannock Twp.

Delano: “Any idea what’s that about?”

Collins: “Not at all. Not at all.”

Delano: “Could that have been written in a way to understand?”

Collins: “Yeah, I believe. But they don’t want you to understand, I think.”

We found one attorney who agreed.

“Overly complex language can be confusing I think. Just too time consuming. It’s probably done on purpose,” says Alex Alioto of Ross.

Maybe, but the Consumer Financial Protection Bureau has urged all credit card issuers to write shorter agreements in plain English.

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