Bankrupt!: Rising Late Fees and Complex Language

Government Report Criticizes Credit Card Companies for Rising Late Fees

Penalties for late credit card payments have more than doubled in the last decade, but "disclosures of such fees are written in language too complicated for many consumers to understand," a government study shows.

The report released by the Government Accountability Office "describes the fees, interest rates and disclosure practices of 28 popular credit cards." It found that credit card late fees rose more than 160 percent between 1995 and 2005 to $33.64 annually,"" while some credit card issuers impose penalty interest rates of more than 30 percent. Credit card companies have also imposed "new charges for services such as making payments by telephone and requesting cash advances."

In 2005, "U.S. consumers spent more than $1.8 trillion on credit cards." The report highlighted the fact that "cardholders were unaware of large portions of information relating to their credit cards." It found that disclosure material is "written in language that is hard to understand, bury important information in text, fail to put related material together and use small typefaces." Some disclosures used language "written for a high school reading level, when about half of adult card-holders read at, or below, the eighth-grade level."