Credit-Card Agreements as Literature

Photo: Hemera Collection

Credit-card agreements seem to get longer and longer. Why? Planet Money explains some of the factors, which range from the necessity for less legalese to Congressional reforms.  Roberta Torian, a lawyer who writes credit-card contracts, explains how simpler language can make the agreements longer: “Because there are terms such as ‘herein.’ ‘As set forth herein.’ If I’m not going to use herein I have to say, ‘as set forth in this agreement.’ So I now have three words where I had one.”  Torian also explains that she has to state even obvious concepts: “Roberta says that if she doesn’t write ‘you have to pay us back,’ borrowers may try to get out of paying their bill.” Planet Money also interviews Susan Kleimann, a sort of “financial document cryptographer for the people.”  “If something looks difficult, people assume that it is difficult and they won’t read it,” says Kleimann.”Headings help. White space helps. Breaking things into lists helps.”


I'm certainly not yet sold on the need for CC agreements to be nearly as complex as they are.

One way to look at the 'herin' example is that you tripling the word count, another way to look at it is you are adding two words. Also, I'm not sure why an agreement needs to tell you that what it's telling you is part of the agreement.

The problem might be with CC companies intentionally trying to confuse your, or it might be a problem with a legal system that takes form over substance, but certainly the current arrangement is far from optimal.


It can be done. Use two forms, a simple one for normal people and a more complicated one for courts. See how has gone about this issue with its licenses.

Joshua Northey

I have always felt that these agreements probably wouldn't stand up in court. I know a lot of corporate documents are seen that way (EULAs, and NFL warnings et cetera) Particularly if someone took it upon themselves to use this tactic against some of these companies. Their high priced lawyers would tear them apart so quickly.

I am always reminded of the time I bought my first ipod. I wanted a regular model, but at the storage I desired they only had video. I expressed concerns about the screen breaking with the rough use it would surely get. The clerks guaranteed me that the extended service agreement would cover any accidental damage. I spoke to the manager as well just to be clear since I was aware this might just be the hard sell, but he assured me that if anything went wrong they would fix it.

So then 2 years later I was getting a kite out of a tree with it in my pocket and broke the screen. I take it in and they say "Oh we no longer cover that because it was proving too expensive". That is literally what they said. I asked them "What does that have to do with our previously enacted agreement?" and they pointed out that in the online version of the agreement was wording saying they could change the terms as they saw fit.

It always made me want to get into a position to be a vendor to Best Buy. I could sign a contract for the delivery of 500 widgets to their distribution center. Then come back a week later to the distribution center an re-appropriate them after informing them that in the longer online version of our agreement on page sixteen there was a clause stipulating that I was free to change the terms of the agreement at any time. Selling the widgets had lost me money so I was taking them back without refunding their money.



Credit-Card Agreements is most sophisticated deception and fraud document but somehow it's legal in US.

Simon Farnsworth

Maybe US regulators should take a leaf out of the UK regulator's book? As well as the formal legal document, card companies are required to provide a summary, which must be a true reflection of what you're agreeing to. So, picking on First Direct as an example: is the long form terms and conditions with all the details. It's dry language, but if you want to know (say) exactly how interest is calculated on a purchase, or precisely when you will be in line for a default charge, that's the source. is the shortened agreement that the bank must provide. The shortened agreement itself fits in one page of A4 paper; it tells you about minimum repayments, interest rates, charges for events like paying late, commission charges for foreign transactions etc.

The legal system here can then resolve them together quite easily - in the event of contradiction, whichever is advantageous to the customer stands (so if T&C minimum payment is £100 or 1% of the balance, agreement is £5 or 3% of the balance, the customer is bound to £5 or 1% of the balance). In the event that the long T&Cs clarify detail in the agreement, the long T&Cs hold (so if the agreement says "late payment fee is £12" and the long T&Cs say "you have paid late if your payment has not cleared into our accounts by the 1st working day after the 30th calendar day since the statement date", then the late payment fee stays at £12, and you can't argue separately that a cheque posted 30 days after the statement date isn't a late payment).