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Abstract We examined the readability of credit card agreements and its relationship with financial charges. Examining the credit card agreements filed with the Consumer Financial Protection Bureau in 2014, we… Click to show full abstract
Abstract We examined the readability of credit card agreements and its relationship with financial charges. Examining the credit card agreements filed with the Consumer Financial Protection Bureau in 2014, we found that the typical credit card agreement is written at an 8th to 9th grade level, which is higher than the average American reading level. We show that the readability of credit card agreements is negatively related to financial charges: cards with easier-to-read agreements are associated with lower annual percentage rates, lower minimum monthly payments, and lower cash advance fees.
Journal Title: Finance Research Letters
Year Published: 2017
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