How Credit-Card Contracts Got So Frustrating

How Credit-Card Contracts Got So Frustrating


Encouraged by Ralph Nader's consumer movement, Citibank adopts "plain language" contracts, slashing loan agreements from 3,000 words to 600.


South Dakota's then-governor, Bill Janklow, signs a new state law that allows card contracts to be changed at any time for any reason.


An amendment to the federal Truth in Lending Act requires more specific contracts; companies respond with pages of complicated fine print.


Fighting new competitors, big banks use change-in-terms clauses to hike rates on good borrowers, making up for losses from defaulting customers.

MID-1990sCapital One and other nonbank finance firms offer credit to ever-riskier borrowers at low introductory rates but with steep fees and penalties.


The subprime lending spree boosts credit-card debt and fuels questionable mortgages with "teaser" rates; a housing bubble develops.


Under Bernanke, the Fed adopts restrictions on new credit cards, effective July 2010; separate legislation is introduced to protect cardholders.

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