Testing Intelligence

To Credit or Not To

Jaime Borrero

Com/172

April 4th 2011

Regina Vega, MA

To Credit or Not to

More and more credit cards are offered in today’s age. The latest trend in credit cards has become celebrity endorsed cards marketed toward a younger crowd. If consumers are applying for a Kim Kardashian credit card, they should carefully read over the contract. Americans in the past used credit to purchase high priced items, like homes or vehicles; Americans use credit as a way to live day to day. Without proper education and good financial habits Americans should not use credit.

Credit card contracts are written at an elevated reading level in an effort to confuse the consumer. Prater (2011), “Credit card contracts are written at a 12th grade level” (para. 1) the average American reads at a ninth-grade level, making credit card agreements not understandable to most. According to Creditcard.com, some credit agreements can be extremely wordy, as high as 20,799 words. The average contract is 3,771 words; compare that to the Constitution that has only 4,018 words. Consumers blame the banks and creditors for purposely composing these agreements unintelligible; giving banks the ability to hide deceptive statements. Careful consideration should be taken when reading the contracts, including rates, fees, and events that trigger rate changes. Consumers have taken creditors to court over these practices with mixed results. In many cases, credit lenders avoid violating any laws because all the increases are stated in the contract (Prater, 2011). Banks and creditors state that lengthy contracts are unavoidable because they are simply following credit disclosure laws. Terms such as “Fixed APR,” and “Preapproved” do not always mean what they intend. A card with a fixed...