Consumer group: Make credit card contracts more readable
Agreements are still too confusing for consumers, group says
A major consumer group has launched a campaign urging voters to lobby Congress to make credit card agreements easier to read and understand.
Consumer Reports magazine is asking its readers to contact their U.S. Senators and ask for clear, simple and short credit card agreements.
Credit card agreements are contracts that spell out the terms and conditions of use of card accounts. They are typically several pages long and often written in confusing legal terms.
A CreditCards.com special report found that the average U.S. credit card agreement is written at a 12th grade reading level -- well above the ability of four out of five American adults to understand. The average adult reads at only a ninth grade level. Although some bank contracts are written at the more understandable eighth grade level, the vast majority are difficult to decipher and can drone on for 20,000 or more words.
Consumer Reports points out that credit card agreements are written by bank lawyers to benefit banks.
Long, confusing contracts need rewrites
"They are long, confusing, fine print documents that lock you in to terms that can sometimes bite back later," according to a letter from Consumer Reports president Jim Guest. He adds: "It should tell you in straightforward language (and in a type size that people can actually read) exactly how much you will pay in fees and charges, what can cause your rate on future purchases to change, and what penalty fees you might face."
The request for voters to lobby their senators comes as lawmakers are about to debate who should lead the new Consumer Financial Protection Bureau. President Obama is expected to officially nominate a director in the coming weeks. Unofficially, former Harvard University law professor Elizabeth Warren has been leading efforts to launch the agency by the July 21, 2011, target date.
Consumer groups are concerned that senators will stall approval of the director and delay the startup of key provisions of the Wall Street reform law. That law, approved in July 2010, gives the consumer financial protection agency the power to oversee nonbanks such as payday lenders and other companies that provide financial services.
Consumer Reports wants the new consumer advocacy agency to make clear and simple credit cards one its first priorities.
- Consumer watchdog agency considers deleting complaints from website – CFPB acting director John M. 'Mick" Mulvaney said deleting public database of consumer complaints about companies is an option ...
- CFPB rollback of payday loan protection draws criticism – Consumer advocates decry lack of enforcement actions and reopening of payday loan regulation by consumer watchdog agency led by Trump appointee ...
- Credit card APRs to rise as Federal Reserve raises rates again – Credit card APRs will rise after the government's interest rate setting committee decided to raise its benchmark rate by 0.25 percent to keep inflation in check ...