New federal credit card agreement database not user-friendly

There's a wealth of information, but it lacks ways to find, sort it

By Dana Dratch

Wonder why you can't seem to make it through your credit card agreement? It's heavy reading: A CreditCards.com analysis found that the average U.S. credit card agreement is written on a 12th grade reading level, three grades above the average American's reading level.

MAIN STORY: Credit card agreements unreadable to 4 of 5 Americans 10 most unreadable credit card agreements 10 most readable credit card agreements 10 wordiest credit card agreements Readability of credit card agreements from biggest 20 banks How credit card agreements' readability compares to familiar documents Quotable: What lawmakers, consumer activists, bankers say 3 language experts try to make sense of a card agreement Federal database of credit card agreements not user friendly Video: Consumers try in vain to understand credit card agreements

Consumer advocates were thrilled when the Credit CARD Act of 2009 included a provision that mandated creation of a database for credit card agreements. Visions of consumers being able to instantly access their own card contracts or compare terms prior to application warmed the hearts of money gurus and consumer advocates alike.

But now that the database has been up and running for a few months, reviews are mixed.

Overall, experts are thrilled that the information is available for study and comparison. "It's pretty good," says Linda Sherry, director of national priorities for Consumer Action, an advocacy group. "It's an overwhelming amount of information."

But she concedes that, at least at this point, it may be more useful to advocates and academics than to consumers.

"It's perhaps not that useful for the average person who wants to compare credit cards," she says. "As a researcher, it's wonderful to have all this data in one place."

Chi Chi Wu, staff attorney for the Boston-based National Consumer Law Center, agrees. "I don't think it's meant to be a tool for comparison shopping," she says. "This is probably more useful for advocates and researchers, or if someone can't find their card agreement."

So is the database easy for consumers to use?

"They did some things well, and they did some things not so well, says Jennifer Golbeck, co-director of the Human-Computer Interaction Lab at the University of Maryland.

On the plus side: "They really make it obvious what you're able to do and how you're able to do it," she says. The site is clear and uncluttered. Files are easy to open and read, she says. Also, because text versions of the agreements are available, users don't have to download PDF files or install Adobe if they don't already have it

In addition, it allows you to search for your card issuer's regulator, in case you want to file a complaint.

On the minus side: Some of the text files have strange characters or weird formatting, Golbeck says. But that problem could be easily solved by using  "a simple filter on the file" prior to posting, she says.

The credit card contract database
The database, which went live May 24, 2010, is designed to hold contracts for all currently offered cards with 10,000 accounts or more. Cards with fewer accounts, or cards that are no longer being offered don't have to be included. It's updated quarterly, with the next update scheduled for sometime in early September, according to the Federal Reserve.

As of July 22, more than 300 issuers post contracts for more than 1,300 different cards in the database. Contracts are displayed in both PDF and text format. In many cases, Spanish language versions are also available.

One big problem for consumers: labeling.

On the site, card agreements are listed by issuer name. So if your search pulls up a long list of card agreements from one issuer -- some institutions have dozens -- there is no way to tell which is which without opening all of them, Golbeck says.

Adding to the confusion: Sometimes the same institution will have subsidiaries with similar names or unfamiliar locations.

While some contracts specify which cards they govern -- allowing consumers to search by that name and find the agreement instantly -- others don't list a card name. So even if you read the entire document, you may not be able to match a  contract to a specific card.

"As a law professor who studies contracts, I couldn't find my own credit card agreement," says Angela Littwin, assistant professor at the University of Texas School of Law.

Another complaint: Some card agreement addendums are listed separately from the card agreements themselves, says Littwin. So unless you know to search for them, you may be missing part of your contract, she says. Her take: "Better labeling would be huge. Putting an entire credit card agreement together would help."

Agreements, card names don't match
One feature that would be useful: allowing consumers to search all contracts by the marketing names of the cards, says Littwin.

While some issuers post separate files in English and Spanish, the site doesn't label files for language. Consumers have to open them to find out which is which.

But several consumer advocates say that the major language barrier for consumers is the legalese of the contracts themselves. "It's math, it's law, it's very complicated," says Lauren Bowne, staff attorney for Yonkers, N.Y.-based Consumers Union.

While the Federal Reserve posts the files and maintains the site, each individual card issuer is responsible for producing  the computer files containing its agreements, according to the Federal Reserve.

The document quality varies widely. Some agreements are reproduced in small type with a multitude of pages per screen, while others are clear, clean and easy to read.

One shortcut: if you're already a cardholder, go to the issuer's site and either download the contract for your card or call to have it sent to you.

Looking for a one-stop tool to compare terms and conditions? Check out the Federal Reserve's Survey of Credit Card Plans, which is updated twice a year. It contains items like interest rates, grace periods, annual fees and contact phone numbers. And you can search by institution name, APR or annual fee.

The future
Some in the credit industry believe the database is already a hardship for issuers. "I think the regulation is already onerous and burdensome on the industry," says Chris Stinebert, president and CEO of the American Financial Services Association, a Washington, D.C., trade group for the consumer credit industry. While he notes that issuer "compliance has been pretty good," Stinebert admits that he's "not sure how useful" the database is to consumers.

More time is needed to get a better sense of reaction from both consumers and issuers, he says. "At least six months." 

The Federal Reserve is not specific regarding its plans for the database, except that it will get better. "It's our expectation that the database will be refined and modified to make it easier for consumers to navigate the site," says Susan Stawick, spokeswoman for the Federal Reserve.

Clouding the picture further: A new federal Consumer Financial Protection Bureau, mandated by the Wall Street reform law but yet to be created, could eventually take over management of the database.

A wish list
A few relatively simple changes could make the database a lot easier for consumers to use, says Golbeck.

First, label which card each agreement governs and perhaps allow consumers to search by the marketing name of the card. This "would not be hard from a technical standpoint," she says.

Second, "have something that summarizes salient parts of the agreement," says Golbeck, such as interest rates, fees, rewards, etc. "That would make it much easier," she says.

Third, add a comparison tool that would allow consumers to look at how those important factors stack up for the handful of cards that interest them. Creating that kind of tool is a lot easier than most would think, Golbeck says. "It would take about a half hour of programming."

See related: MAIN STORY: Credit cards unreadable to 4 of 5 Americans, 10 most unreadable credit card agreements, 10 most readable credit card agreements, 10 wordiest credit card agreements, Readability of credit card agreements from biggest 20 banks,  How credit card agreements' readability compares to familiar documents, Quotable: What lawmakers, consumer activists, bankers say, 3 language experts try to make sense of a card agreement, Video: Consumers try in vain to understand credit card agreements

Published: July 22, 2010

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