A One-Page Credit Card Agreement

Credit RiskSiegel+Gale put together this PDF which boils down a sample credit card’s terms to one page.

While the language is simpler than your average 30-page contract, it’s still not ideal; note that the late fee is still $39, there’s  Binding Mandatory Arbitration language, and the bank reserves the right to change the credit limit at any time for any reason.  It’s less clear if this contract allows the bank to change any of the terms at any time for any reason, which is the reality for most cards.

Consumers Union also took a stab at simplifying credit card language. Here’s their letter which gets at what the banks are really saying with those 30-page contracts:

Dear Credit Card User,You owe us money. We can raise your interest rate just because we feel like it. We can do this even if you have always paid us on time and your credit is still good.

We gave you a zero percent interest rate to entice you to transfer a balance to us. Now that you have, we can raise your rate from zero to our standard rate or even higher, to our default rate, if you pay us late or go over your credit limit just one time.

You may have to get your payment to us 20 days from when we mail you the bill. Mail delays in either direction are your problem. If your payment is late even once, we can boost your interest rate to as high as 29.99 percent.

And you out there on the West Coast: Your electronic payment is late if you set it up after 2 p.m. Pacific time on the date it’s due.

Sincerely,Your Bank

The good news is that in February, some great changes will go into effect, and banks won’t be able to raise your interest rate on old debt unless you pay more than 60 days late.  If you’d like to see that change go into effect sooner (like in time for the holidays), click here to take action.