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Credit card contracts: Harder than 'Twilight'

Analysis finds that 80% of Americans can't read well enough to understand the average credit card agreement.

By Teresa Mears Jul 28, 2010 8:59AM

If you found the "Twilight" series of novels hard going, don't even try to read your credit card agreement. But if you can sail through the King James version of the Bible, you might be able to understand a credit card contract. analyzed 1,200 credit card agreements and ranked them on difficulty using what's known as the FOG, or "Frequency of Gobbledygook," index, which is actually a real scientific formula. The analysis found -- we are shocked, shocked! -- that gobbledygook was frequent.


To read the average credit card agreement, you need the ability to read at the 12.37 grade level, or just over a high school diploma. Just because you graduated from high school doesn't mean you can read at a 12th-grade level. The average American reads at a ninth-grade level, and only 20% of Americans read above the 12th-grade level, which may explain why so few understand their credit card contracts. You can see a video of people trying to figure them out here.


The new Consumer Financial Protection Bureau, part of the financial reform package recently signed by President Obama, will have the power to require that credit card contracts be written in plain English. But that may be a way down the line.

In the meantime, maybe you want to practice on the Twilight series, which is written at the 8.2 grade level, or the King James version of the Bible, at the 11.1 grade level.


If you can whiz through your credit card agreement, as a rocket scientist consulted by did, then you might want to consider even more difficult documents, such as a New York Times editorial or the Declaration of Independence. The hardest document analyzed by the team was the Bill of Rights, which we guess is why members of the U.S. Supreme Court don't always agree on what it means.


The rocket scientist wasn't fazed. "I've read things far worse than this," Steven Collicott, professor of aeronautics and astronautics at Purdue University, told "If this were in aerospace, a lot of these things would be replaced by acronyms that you'd have to look up."


Making the agreements so hard to understand shows a lack of courtesy and concern for customers, etiquette expert Anna Post said. She told

If you deliberately write in a way that makes me feel stupid, at the end of the day is that my fault or yours? No one likes being made to feel the fool. What's worse, it makes people question whether there is something in there, that they're being tricked. Whether they are or not, that perception is a very dangerous one for credit card companies.

She suggests a kindler, gentler agreement: "What if you had the English translation, like in high school Shakespeare class where you have the classical Shakespeare on one side and what it means in today's terms on the other?"


What would someone with experience in the CIA say about the credit card agreement language?

"God, what gobbledygook!" responded Barry Eisler, a former technology lawyer and CIA operative who now writes thrillers. "This is standard horrible spaghetti language drafted by a lawyer without competence or common sense."


He believes the obfuscation (are we getting too foggy here?) is intentional:

The intention of this kind of language is to make anybody who looks at it not read it, or to send you running in the opposite direction. But either way, you won't read it, and even if you try to read it, you're not going to understand what it means.
But if there's ever a problem, they're covered because they'll be able to say, 'Well look, the fine print right here clearly says ....' But it doesn't clearly say anything and the hapless public will not ever have read it, or even if they try to read it, they'll never be able to understand it. And that's what that is intended to do.

Agreements written by the CIA would have been much clearer, he said.


Banks blame the government (though perhaps not the CIA) for the density of their fine print, citing state and federal laws that mandate specific disclosures. They deny being intentionally deceptive.


"It's unfair to say that these are deliberately made complicated," Nessa Feddis, a spokeswoman for the American Bankers Association, told "They try to make them simple, but there are legal requirements for disclosures."


Ten credit unions hold the honor of having the most readable agreements, most written around the sixth-grade level. Eight other credit unions, plus Compass Bank, have the most unreadable agreements, requiring education beyond a bachelor's degree to understand.


Ed Mierzwinski, consumer program director for the U.S. Public Interest Research Group, suggests that the language of the contracts may be less important than we think. He's more concerned about "tricks and traps" within: "What good does being able to read a contract mean if the contract says, 'We win, you lose'?"


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