You need to read your credit card agreement

According to a recent analysis from, credit card agreements are unnecessarily difficult to read. Despite efforts from the Consumer Financial Protection Bureau to get card issuers to make their agreements shorter and simpler, these contracts are still considered by many to be needlessly complex. As a result, nearly 75 percent of card holders admit to not reading their credit card agreements.

Per’s analysis, most credit agreements require an 11th grade reading level. This is a real problem, because half of American adults read at a 9th grade level or below. This dense, wordy prose, combined with excessive length (one cited contract was over 15,000 words long – the average novel is only 80,000 words long), makes reading these agreements a time-consuming chore. The average credit card agreement, in fact, takes appropriately 20 minutes to read in full.

And yet it’s vitally important that you do read your credit agreements! These agreements contain information that can help you make smarter choices with your money and your credit. Most importantly, failing to read your agreements can end up costing you a significant amount of money. Among other things, these agreements define:

Account fees and charges – What fees will you be charged and how will your interest be calculated? These are questions that your agreement can answer. Understanding your potential fees (including when those fees are triggered and how they might be avoided) and charges can help you use your credit card more effectively and save you money over time.

Your rights as a consumer – What actions can you take if charges are incorrectly attributed to your account? If you find an error on your monthly statement, your agreement should explain the path to remedying the situation.

What to expect if your account goes into default – The card issuer has the right to take certain actions should you fail to make payments on your account. Those potential actions should be spelled out in the agreement.

Simply put, the more you understand about your credit agreement, the less likely you are to take an action that unnecessarily costs you money. So while these agreements can be a chore to read through, it’s important that you make the effort.

For more help understanding your credit card agreement, be sure to check out our explanation of common credit contract terms.

The above information is not intended as legal advice. For legal advice, consult an attorney.

Jesse Campbell is the Content Manager at MMI, focused on creating and delivering valuable educational materials that help families through everyday and extraordinary financial challenges.

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