Why You’ll Have an Easier Time Reading 'Moby Dick' Than Your Credit Card Bill

Are the terms and conditions attached to your credit card indecipherable? You're not alone, and it's a bigger problem than you thought.


The classic book “Moby Dick” by author Herman Melville tells the tale of a whaling ship and its captain pursuing a vendetta against a monstrous white sperm whale. While the story sounds interesting, it’s generally considered to be tough to read given its length and themes.

That said, reading “Moby Dick” may still be easier to understand than something almost all of us have to deal with—the terms and conditions attached to our credit cards.

For credit card users, an inability to understand what they’re signing up for can have dire financial consequences.

“These are the rules of the game,” says Linda Sherry, a director at consumer education and advocacy organization Consumer Action.

“They spell out what can happen ... if you are late with a payment,” she says. “Or, how the minimum payment and the periodic interest rate is determined. They also usually include information about how you can respond to unauthorized use to protect yourself from fraud.”

Terms and Conditions: America’s ‘White Whale’

When you sign up for a credit card, you generally receive a pamphlet or stack of paperwork that lays out the terms and conditions users are agreeing to. Those include things like what interest rate you’ll be charged, and how to earn or redeem rewards points . But those terms and conditions tend to be dense and indecipherable to the majority of U.S. consumers, according to a new report from content-analysis software-maker VisibleThread. More than 60 percent of people over the age of 25 can’t understand it.

VisibleThread analyzed 50 sets of terms and conditions from the largest financial institutions nationwide. It evaluated each set of terms for readability, density of complex words, use of passive voice, and academic tone. Out of the 50 sets of terms evaluated, they found, only one (Valley) is easier to read than “Moby Dick.” None were as easy to read as the Harry Potter series.

The VisibleThread findings closely mirror those in a similar 2016 report released by That analysis also found that only around a quarter of Americans claim to actually read their contracts. It’s tough slog, for sure. But our failure to read the fine print—because we can’t or we won’t—may point to bigger problems, such as low levels of financial literacy.

And it’s not just a problem affecting us regular consumers. Earlier this month, Kathy Kraninger, director of the Consumer Financial Protection Bureau, was asked to calculate the annual percentage rate on a hypothetical loan during a congressional hearing, and was unable to do it.

Obviously, calculating an APR is different from reading through a pamphlet of terms and conditions. But the complexity may lead to complacency for many Americans. Credit card users, for example, may find themselves in trouble if they don’t properly understand their effective interest rate, or promotional conditions on the card that expire after a predetermined period of time.

Harpooning the Fine Print

Face it: Credit card companies aren’t likely to wave a magic oar and clean up their terms and conditions overnight. So if you want to make sure you’re not missing anything important, you’re going to need to learn how to decipher the fine print—or at least know the things to look for.

During the application process, you can choose to fill out the “Schumer box” to receive a summary of the costs associated with a card. “This spells out most of the top level information people want to know, like whether the interest rate is variable and when variable rates are subject to change,” Sherry says. It also spells out “your grace period on purchases, annual fees, foreign transaction fees, and other fees, such as cash advance fees or balance transfer fees.”

But if you missed the Schumer box and only spend a few minutes skimming the paperwork, make sure you cover these:

Fees and payments: You’ll need to know when your credit card bill is due, how much you’ll be on the hook for every month, and what you’ll end up owing if you miss a payment. And remember, even if you don’t use your card, it may have annual fees associated with it that you’ll need to be aware of.

APR and interest rate: This will tell you how much interest you’ll pay on your balance and on other services, such as cash advances. Some cards have variable rates, or rates that change after a certain amount of time.

Rewards and benefits: Many cards offer rewards and other incentives, and they’re not always straightforward. Offers could change quarterly, for example, or have caps on certain bonuses. Make sure you understand how those programs work.

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