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An analysis of more than 2,000 current card agreements shows they’re written, on average, at the 11th grade reading level – better than five years ago, but still too hard for at least half the population to readily understand.

“They’re still mind-numbingly obtuse,” said Joe Ridout, consumer services manager at Consumer Action in San Francisco, which monitors credit card industry practices.

When consumers come up against the dense legalese of card agreements, they struggle, or give up trying to read them, according to a scientific telephone poll of 1,000 Americans we conducted in August. Asked to describe their card agreement in one word, people most frequently said “wordy,” “confusing” or “complex.” “Tedious” and “painful” were volunteered often, too. Just 26 percent of cardholders say they regularly read their credit card contracts.

Contract clarity elusive

The complexity persists despite a simplification campaign launched in 2011 by the U.S. Consumer Financial Protection Bureau. It urged card issuers to cut the length and complexity of credit card contracts. The bureau published a model agreement 1,188 words in length.

CreditCards.com analyzed the readability of every 2016 credit card agreement on file at the CFPB, and compared them to those filed in 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.

Key Bank’s Key2More Rewards card has the lengthiest agreement in the database. At 15,037 words, it is slightly longer than Shakespeare’s play “The Comedy of Errors.” Printed out, single-spaced, with one-inch margins, the Key2More agreement consumes 30 pages of paper.

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. Other banks hover in the 15th grade gobbledygook stratosphere.

Card agreements essential

Though largely unread and unreadable, credit card agreements are essential. Each is a basic rulebook governing a credit card. Sometimes called “terms and conditions,” they define pocketbook issues. How interest is calculated and fees are charged. Your rights to dispute charges. The card issuer’s right to collect from you. Other portions deal with authorized users, non-U.S. transactions and an array of other features. Privacy notices and rewards programs are usually covered separately.

Not reading the fine print can have painful consequences. Confusion about fees, interest rates and payment obligations can be costly and damage your credit for years. Users signify their acceptance of the rules in the agreement with every card swipe.

Measuring readability

Our finding of cards’ average 11th-grade reading level is based on a yardstick called the Flesch-Kincaid formula, developed in the 1970s to help the U.S. military assess the reading abilities of its enlisted personnel. The formula is now commonly used throughout the country to evaluate educational texts.

A key concept behind the formula is this:

Short sentences are understandable.

Long sentences, which use multiple clauses, jumping from one topic to another (however well-meaning an individual diversion may be), becoming convoluted and giving the reader too much to grasp easily in a short period of time, are not.

The Flesch-Kincaid formula tallies the number of syllables, words and sentences in a text to estimate the reading grade level necessary for comprehension.

The formula has limits. It can’t measure how logical or clearly presented any text is, so it is only a rough guide for readability. However, differences of a full grade or more are considered a significant difference in readability.

Didn’t we all graduate high school?

An 11th-grade reading level may sound acceptable, given that 88 percent of Americans over age 25 have completed high school. But most adults read at a level two or three grades below the highest grade they finished in school, according to readability experts.

“The years you complete in school doesn’t correlate to what your reading level is,” said Susan Kleimann, chair of the Center for Plain Language in Richmond, Virginia.

The center pointed a finger at a Victoria’s Secret credit card from Comenity Bank in its latest round of “awards” for unclear writing. The 7,700-word agreement had small type and a difficulty level of grade 13, equal to the first year in college.

Contracts should be written at the ninth grade level or below for a majority of consumers to understand them, she and other reading experts say. Estimates of reading ability in the population say that most people read at the eighth or ninth grade level or lower.

What about credit cards’ average 11th grade reading level? “I think that’s very high,” Kleimann said.

Consumers versus courts

Banks say they have progressed toward easier-to-read terms, but their contracts can be only so simple. True, card agreements should be understandable, but for the banks, they first need to be airtight contracts that hold up in court.

“There’s only so far you can go and still have an enforceable contract,” said Nessa Feddis, senior vice president at the American Bankers Association. Much of the language is written to conform with legal precedents or federal regulations, she said.

Plain-language advocates disagree that airtight contracts must contain puffed-up verbiage.

“I think it is 100 percent possible to write a contract that is understandable to consumers, and still be legally binding,” Kleimann said.

“We feel confident our disclosure meets all the regulatory requirements,” said Matt Freeman, manager of credit cards products for Navy Federal, which produces some of the most-readable contracts. The organization uses feedback from members to simplify difficult language. People in the card business collaborate with marketing and legal departments while writing the agreement, he said.

“We think it’s important our members understand the product, because they’re more likely to use the card responsibly.”

Cost of confusion

A lack of understanding can cost consumers.

We think it’s important our members understand the product, because they’re more likely to use the card responsibly. 2014 Matt Freeman Navy Federal Credit Union

“People who understand what they’re getting pay less for credit than people who don’t,” said Kathleen Engel, a research professor of law at Suffolk University in Boston, who has studied subprime and predatory lending. Unreadable contracts serve to insulate the lender from lawsuits by fulfilling disclosure requirements, she said, while consumers remain in the dark about how the loan works.

Not-so-good old days

Although there’s little progress on readability in the past five years, credit card contracts have improved greatly from the more-distant past, reading experts and consumer advocates said.

“We’ve certainly noticed that things are better than they were pre-CARD Act,” Ridout said. The 2009 Credit Card Accountability, Responsibility and Disclosure Act prohibited some of the more dangerous consumer practices, such as universal default and retroactive interest rate hikes. The ban on those practices eliminated some of the wordiest clauses from card contracts.

“It’s not just a matter of bankers learning how to write, or to write better,” he said. Making abusive practices off-limits does more to protect consumers than requiring the practices be explained clearly, he said. “Our bigger concern is what they’re writing about.”

Audrey Riffenburgh, president of readability company Plain Language Works LLC, used to use credit card contracts in her classes – as examples of what not to do.

“It was all in legalese, with no spacing between paragraphs \u2026 It was just a huge wall of type that you couldn’t read,” she said. “They were designed I think purposely so people would not read those agreements.”

The current agreement for her airline card, which scored in the 10th grade reading level, has improved greatly from those days.

“It’s got a lot of the things we recommend for plain-language writing,” she said. “I’m surprised by that.”

How we did the study

CreditCards.com used software from Readability Studio to calculate the reading level of credit card agreements filed with the U.S. Consumer Financial Protection Bureau. We examined texts using the Flesch-Kincaid formula, which measures readability in terms of the grade level of comprehension.

Because card agreements often contain lists and tables, the analysis included sentence fragments as well as full sentences. Agreements that contained substantial portions of non-English text were excluded, as were agreements that included terms for bank products other than credit cards. Partial agreements such as pricing disclosures and account opening disclosures were included in overall calculations of readability and word count, but excluded from lists of most- and least-readable agreements.

Video: Unreadable card agreements

Credit card agreements are said to be written on an 11th grade reading level. We came to a university campus with an excerpt from a credit card agreement to see if college students can make sense of what they are reading.

