Complex Credit Card Agreements Put More than Half of Country at Risk

Turns out most people are going in blind when they sign up for a credit card.

According to a new report from CreditCards.com, a consumer site that compares credit cards, most credit card agreements are written at a reading level above that of about half of the country.

A study of more than 2,000 credit card agreements shows they're written, on average, at an 11th grade reading level.

In a telephone poll, by CreditCards.com, of 1,000 consumers in August, only 26 percent say they regularly read their credit card agreement.

When asked to describe their credit card agreement in one word, people most frequently said, "wordy," "confusing," or "complex."

"In credit cards and other aspects of consumer banking, the model often relies on making money from fees that the customer isn't paying attention to or is even aware of," Claudine Gartenberg, assistant professor at New York University's Stern School of Business, told Buzzfeed News.

In 2011 the U.S. Consumer Financial Protection Bureau came to this same conclusion and urged credit card issuers to cut the length and complexity of their contracts.

CreditCards.com analyzed 2016 credit card agreements with those from 2011, among the findings:

• The average agreement requires an 11th grade reading level, slightly better than the 12th grade required to understand card agreements in 2011. However, that's still well above the average consumer's reading level, since half of the American adult population reads at a ninth grade level or below.
• The average credit card agreement is 4,900 words, down about 500 from 2011. While that's a 10 percent improvement, that much text, four times longer than the federal government's model agreement, would take the average adult 20 minutes to read.
• It is possible for banks to write short, readable contracts. All credit card contracts cover roughly the same terrain, but among the largest U.S. credit card issuers, some consistently hit the ninth grade level, which is largely understandable.
• Credit card agreements are important for consumers to read because they are basically the rulebook for your credit card.

If you don't read the agreement there could be painful consequences. Confusion about fees, interest rates and payment obligations could damage your credit for years.