Why Are Credit Card Agreements So Long? : Planet Money We talk to a lawyer who writes credit-card statements — and to an expert who tries to make them simpler.
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Why Are Credit Card Agreements So Long?

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Why Are Credit Card Agreements So Long?

Why Are Credit Card Agreements So Long?

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When mail arrives related to your credit card, not the bill, but just related to your credit card, it is guaranteed to be lengthy and hard to read. Chana Joffe-Walt of Planet Money asks why financial documents are the way they are.

CHANA JOFFE-WALT: You want to know why? Meet Roberta Torian, great posture, meticulously dressed, a woman with a file cabinet full of credit card paperwork.

What's your relationship with that paperwork?

Ms. ROBERTA TORIAN (Lawyer): I write a lot of it. I started writing credit card agreements almost right out of law school, you know, like, over 25 years ago.

JOFFE-WALT: Roberta is a lawyer for Reed Smith in Philadelphia. She takes out a file of some of her favorites, opens up a department store credit card agreement, holds it four feet above ground and allows it to unfold all the way to the floor.

If you got this, or when you do, when you apply for a credit card, do you sit and read the entire thing?

Ms. TORIAN: Of course I do.

JOFFE-WALT: Roberta rolls her eyes, looks back at the document. I ask her to read me some of her work.

Ms. TORIAN: The finance charge for billing period is calculated by applying the periodic rate to the account balance subject to finance charge for each day in the billing period and adding together all of those daily finance charge amounts.

JOFFE-WALT: Do you read that and think that's very clear, what that's saying?

Ms. TORIAN: Yeah, I mean - I do. I mean we're saying that this is what we do. You have a billing period, we tell you that the charges are separate depending on the plan. I can see from your face that you don't think it's clear at all.

JOFFE-WALT: I don't. But I do have to say Roberta proceeds to make a pretty convincing case that credit card agreements have to be exactly as ridiculous as they are, long and abstruse.

Ms. TORIAN: 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.

JOFFE-WALT: Simpler language, Roberta says, makes the document longer. You can print it in eight point font so it'll fit on three pages, but then people complain that they can't read it.

The biggest expander of our credit card paperwork, though, is Congress. Every decade or so Congress demands that our credit card companies and financial institutions tell us more. So, Roberta has to write more.

What happens if you lose your credit card? How quickly can you access your money? What are the different kinds of accounts? How do the terms differ if you're in New Jersey or Nebraska and what about online banking? Everything. If I don't write you have to pay us back, Roberta says, you don't have to pay us back.

Ms. TORIAN: Then you have to sue and the person can say it was a gift.

JOFFE-WALT: So everything Congress and your bank think you need to know are in these pages, Roberta says, including any changes, month to month, in your statement, which brings her to her least favorite words.

Ms. TORIAN: But who reads that stuff anyway? So I guess somebody needs to come up with a way to make people read their statements and I don't know what that way is.

Ms. SUSAN KLEIMANN (CEO, Kleimann Consulting Group): Headings help, white space helps, breaking things into lists helps.

JOFFE-WALT: This is Susan Kleimann. She's sort of like a financial document cryptographer. When Congress passes a new law that requires banks to change the way they communicate with us, Susan gets a call. And she proceeds to study every word and centimeter of the pages we receive in our mailboxes.

Ms. KLEIMANN: You know, if something looks difficult, people assume that it is difficult and they won't read it.

JOFFE-WALT: A new Consumer Financial Protection Bureau, created by the bank reform bill, wants to create and enforce easy-to-read financial documents. It wants to get people like Susan to translate language written by people like Roberta.

Roberta points out that the changes will probably make credit card agreements more specific - and longer. But Susan says, if it'll get people to even look at these things, maybe just skim, that's a major accomplishment.

Chana Joffe-Walt, NPR News.

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