Ever take a look at the terms and conditions when you sign up for a credit card? If you're like a lot of Americans, you probably haven't. And even if you have, it's likely you couldn't figure out what it said.
It turns out the average credit card agreement in the U.S. is written at an 11th-grade reading level, far higher than many consumers can understand. The average reading level is around a seventh-grade level. That gap can lead consumers to ruin their credit and rack up merciless hidden fees, according to a study out Thursday from CreditCards.com.
"Most credit card agreements are so confusingly written that the average person — even if they took the time to read it all the way through — probably won't be able to understand it," said Matt Schulz, senior industry analyst at CreditCards.com.
The study looks at more than 2,000 credit card agreements filed with the Consumer Financial Protection Bureau, a government agency created as part of the Dodd-Frank Act. In 2011, the CFPB began a program to simplify the reading levels of credit card agreements to make them more accessible to the consumers who use the cards. The analysis suggests that while some progress has been made, the agreements are still not within the grasp of much of the population.
Just look at a line from a Navy Federal Credit Union agreement, which outlines policies on security interest: