Earlier this month, the National Consumer Law Center® (NCLC®) published a paper with the title, “Beyond the Credit Card Act: Features of a Safer Credit Card”. As the name implies, it suggests that consumers should have access to safe credit cards, and sets 11 goals that might help the industry to develop such things.

One of these was for simple credit card terms that meet expectations. In particular, it advocates:

• A one-page credit card agreement
• Simple, easily understandable language
• The elimination of “gotcha” clauses (terms that don’t meet consumers’ reasonable expectations)
• Improved transparency when it comes to disclosing credit card rates and fees

Just how realistic those proposals are is open to debate, but there’s little sign that credit card companies are on the same page (or even in the same library) as Lauren K. Saunders, the report’s author. Indeed, as Ms Saunders herself observes: “…there is no end to the ingenuity of credit card issuers to come up with new schemes that confuse and confound consumers.”

Credit card terms and conditions literally incomprehensible to most

On Tuesday, shortly after the NCLC report was published, Fox Business ran a story that revealed that 80 percent of Americans are incapable of reading the small print in the agreement when they make a credit card application. Researchers had twice (once in July and again this month) used specialist software to determine the reading attainment level required to make sense of these legally-binding contracts. And they found that it was way too high for the vast majority of consumers.

Apparently, you need on average a 12th grade reading level to get your head around a credit card application agreement. Nationally, people on average have a ninth grade one.

Getting better?

But there’s good news. Some of these contracts became marginally more comprehensible between July and November. It wasn’t by much, and even some of the best remain beyond the grasp of most, but at least the trend is in the right direction.

And, of course, to some extent the whole issue is academic. How many people with 12th grade reading levels actually take time out to read agreements when they apply for credit cards, even though they’re able to do so? Indeed, if you ask the attorneys within your circle of friends whether they have read theirs, you may well find that many (possibly most, or even all) have not done so.

To some extent, credit card companies rely on consumers having better things to do with their time than wade through pages of dense and sometimes obfuscatory small print. (WARNING: this wording may differ from that contained in card issuers’ press releases.)

Published 11/25/10 (Modified 04/23/12)