Reading the fine print: Why credit card agreements are so hard to understand

Credit card agreements

Justin Barton has had several credit cards over the years, but the 35-year-old admits he has not actually read any of the contracts that go along with them.

“I’ve never really read it in detail, just skimmed through it and signed my name to it,” he said.

7 times you shouldn't use your credit card
7 times you shouldn't use your credit card

That’s because Barton, like many Americans, finds the contracts too confusing.

“There’s a lot of fine print in there,” Barton said. “You almost need a law degree to understand it.”

According to a new analysis from, about 75 percent of Americans do not regularly read their credit card’s contracts.

The analysis also found that the average contract requires reading at an 11th grade level, yet half of the adult population reads at a 9th grade level or below. Plus, the average agreement is nearly 5,000 words long.

In fact, the less a consumer might appear to understand, the better chance they will be targeted with high-risk offers from credit card companies.

Antoinette Schoar, chair of the finance department at MIT Sloan School of Management, examined roughly a million credit card offers. She found that customers are targeted in part by their education level.

“Customers who are more educated and financially more sophisticated receive very different credit terms,” she said.

Schoar said that some companies send less-sophisticated consumers flashier letters with pictures and entice them with zero-percent annual percentage rates, but fail to highlight hidden and back-loaded fees.

Her advice for anyone who gets a credit card offer in the mail is to look at the last page. That is where consumers can find “all the important features, in particular the APR, the late fees, and all the finance charges that are on the card.”

CBS News reached out to the American Bankers Association for comment, and the organization said it strongly supports clear and simple disclosures.