Even loan sharks would be ashamed of credit cards' fine print


FINE PRINT. Mouse type. Legalese. Whatever you call it, chances are you don't read it.

Why should you? It's the copy prepared by lawyers. It's not the deal - it's the details. When you close on a house, fine print is 99 percent of the mortgage contract that no one reads. The loan officer provides a verbal Cliffs Notes, and we nod while initialing each incomprehensible paragraph. But we know the important stuff - the term, the rate and the total of the closing costs. In our mind, this is the deal.

Same thing with credit cards, right? You know the interest rate, the credit limit and whether there is an annual fee. You agree to take the card based on that story line. Unfortunately, that story is often fiction.

The narrator is unreliable. You might as well get your credit card from the Bank of the National Enquirer.

According to a recent series in The New York Times, the typical credit card fine print - otherwise known as the contract or term sheet - runs to 12 single-spaced pages.

A term sheet for a Visa card issued by Bank One includes this line: "We reserve the right to change the terms at any time for any reason." Bank One must have consulted a loan shark to come up with that one. I wouldn't be surprised to come across fine print in the future that reads, "We reserve the right to threaten you or your loved ones with bodily harm should you miss two consecutive payments."

They can tuck that clause right next to this one from Chase Manhattan Bank's cardholder agreement. "The highest rate (28.49%) may be charged if the cardholder is late making a payment to any creditor; this can include phone and utility bills, car payments and the like - even if credit card payments are made on time."

So you take on a credit card with a 9.99 percent interest rate and you make your payments on time for several years. Then your gas bill gets lost in the mail and you send in that payment two days late, and suddenly your credit card rate has jumped to 28.49 percent.

I don't know who they got this idea from; even loan sharks don't care if you're late to your other creditors.

A few of my lawyer friends tell me that most lawyers secretly want to write fiction. If they don't have the narrative talent of Scott Turow or John Grisham, I suggest they try working for a bank where they can practice their creative writing. Here's another work of the imagination from Chase Manhattan Bank's cardholder agreement: "The cardholder cannot take the issuer to court or be included in a class-action suit against the company." This is first-rate work, reminiscent of George Orwell's 1984.

We need to bring some of this great writing to the attention of readers. The Office of the Comptroller of the Currency, which oversees most major card issuers, could easily do a couple of things to make this happen.

First, it could require issuers to add some of these clauses to the sticker they put on the card when they send it to you. You know, the sticker that gives you the 800 number you have to call to activate the card.

Second, when you call the number, a tape recording could say something like this: "Before you activate this card, please be aware that we can change the terms any time we want for whatever reason we want, including just because we can. We can immediately raise your interest rate to 28.49 percent if you are late on your car payment or phone bill. And if you don't like it, guess what - you can't sue us. In fact, no matter what we do, you can't sue us.

"If you still want to activate this card, please press 1 to hear about an exciting investment opportunity exclusively for our valued cardholders."

Jim Sollisch lives in Cleveland.

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