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Easy-to-read card contracts

By Janna Herron ·
Monday, September 19, 2011
Posted: 4 pm ET

It's not Pulitzer-worthy, but the new credit card agreements from some issuers deserve a little recognition. reported Monday that several large issuers -- including Chase, HSBC, Discover and Citi -- are rewriting their card contracts in simpler, plainer English that every Joe can read and understand.

The multipage contracts that consumers get when they open an account include the terms of the credit card and what happens if a cardholder doesn't pay their bills. Oftentimes, these agreements are loaded with legal terms that even stump some of the smartest of the population.

"Unfortunately, these disclosures were never intended for consumers, really -- they are written by corporate lawyers to fend off lawsuits," says Linda Sherry, director of national priorities at watchdog group Consumer Action. "So what you get is a laundry list of defensive legalese, which is not that effective."

Instead, consumers want to know basic information about their card, says Sherry, such as the annual percentage rate, what the minimum payment will be and what fees they might get hammered with.

Sherry praised the new agreements from American Express and Capital One, saying they "achieved significant improvement."

In fact, Chase earned a TurnAround Award from the Center for Plain Language, a nonprofit that urges businesses and government to strive for clear communication, after it revamped its agreement, according to the report. That was after Chase got a proverbial "F" from the group last year for its original incomprehensible contract.

HSBC's contract rehabilitation included replacing 25-cent words for more easy-to-grasp 10-cent words, cutting sentence length and getting rid of unnecessary words. Lessons all college freshman learn in their Writing 101 class.

According to the report, HSBC is rolling out their new statements in October, while Chase and Citi's new agreements have been out for months.

The moves by issuers come as the new federal consumer advocacy group, the Consumer Financial Protection Bureau, revs up its watchdog activities. One of the first items on the CFPB's agenda regarding credit cards is to push for more transparent and clearer pricing disclosures so consumers can easily compare offers.

(The agency is also charged with making sure companies follow the Credit CARD Act of 2009 and offers a one-stop credit card complaint center online or via phone by calling (855)411-CFPB.)

The companies interviewed stated the CFPB wasn't a factor in their decision to edit their credit card agreements.

Either way, it's a step in the right direction and one that is long overdue. A credit card contract shouldn't require the services of a lawyer.

Is your credit card contract easy to understand? What would you like changed?

Follow me on Twitter: @JannaHerron

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