How Credit-Card Contracts Got So Frustrating

1975

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

1983

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.

1988

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

2000

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

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

2005

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

2008

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

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