NPR logo A Simpler Credit Card Agreement

A Simpler Credit Card Agreement

The newly created U.S. Consumer Financial Protection Bureau is rolling out a new credit card agreement that it says is "short, simple, [and] easy-to-understand." The two page agreement is being tested at the Pentagon Federal Credit Union, but the agency eventually hopes to get other financial institutions to use it.

Last spring, Chana Joffe-Walt reported on efforts to simplify these type of agreements. Lawyer Roberta Torian explained why they are typically so long:

I had this discussion, actually, with a client last week, because I was writing an agreement over the weekend and the client said, well, you know, I'd rather not have too much legalese. And I said fine, then it's going to be longer. And she said, are you kidding me? And I said no. I said, because there are terms such as herein, as set forth herein; if I'm not going to use herein in, I have to say as set forth in this agreement. So I now have three words where I had one.

Roberta says when she writes these agreements they have to be long because they have so much information everything from "What happens if you lose your credit card?" to "You have to pay us back." If I don't write you have to pay us back, Roberta says, you don't have to pay us back.

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So how did the CFPB manage to squeeze all that onto two pages? Well they cheated a little — they've got a bunch of definitions on a separate document you can view online.

You can check out their sample agreement here. What do you think — does it make sense?