From CreditCards.com comes the news that U.S. credit card agreements are unreadable to 4 out of 5 adults. It is not that they are written in invisible ink, or tiny print, or even that they are hidden away in the deep recesses of some
web site. The agreements are printed in easy to see black and white and mailed to the card holder’s house.
Are they in Latin? Do they involve obscure legal terms? Perhaps they are poorly translated from some foreign tongue?
No, they are unreadable to 4 in 5 Americans because those sneaky credit card companies have written them in standard English, but at a 12th grade level. Bastards.
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Some people think that they are two people. They believe that they suffer from a form of split personality, two individuals with differing tastes and 
inclinations that awkwardly share the same body and, more to the point, the same bank account.
It is an interesting, but which I mean amusing, theory. It is not that I do not think that there really are folks, even millions of them, who have mental health issues such as bipolar disorder, which could be trivialized as two versions of the same person sharing one body. Others have substance abuse problems that cause an irresistible need to ingest certain chemicals.
But the people I am thinking of do not have such problems. They have nothing more profound than an inability to save as much of their income as they think they ought to. This they ascribe to mental illness.
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A while back, I wrote about the assumption made by many personal finance gurus that rich people are good with money. This is a basic tenet of a variety 
of millionaire secrets books, that those rich folks got that way because they knew tricks you don’t. Of course, I don’t think it’s anything like that simple.
A new-to-me blog called Pop Economics (which I found via Smart Spending – Thanks Karen) recently brought up a similar but more philosophical question. Are smarter people better with money?
At one level, it is a silly question. Does anybody believe the contrary hypothesis, that they are worse? More or less by definition, we consider smarter people to be a little quicker to pick up mental skills and gain wisdom. That is what smart means.
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In certain circles there has always been plenty of discussion of credit reports and scores. But since the Great Recession, interest in the topic has grown to the verge of mainstream consciousness. Ordinary folks now routinely consider the
credit score impact of their actions, including such esoteric issues as the undesirability of closing unused credit card accounts. (It increases the ratio of used to available credit, which is bad.)
But through all this it seems as if the underlying point of credit scores has been lost. It is not a game with arbitrary rules meant to keep consumers on their toes. Nor is it a measure of virtue.
If you are in the business of lending money, what you want to know about a potential borrower boils down to a simple question: will this person pay me back? Credit scores do nothing more than give a probability that a borrower will make good, based primarily on his history of paying other people back, but also considering such measures of financial stress as how many times he has asked for a loan recently and the credit lines to credit used ratio mentioned above.
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Regular readers of BMA, and I know there are dozens of you out there, know that there is nothing I like more than science. Particularly science extrapolated from a single experimental result and recounted in blogs.
For example, just last week the NYT’s Economix blog asked Do Hungry People Take Bigger Financial Risks? According to some scientists in the UK, hungry people, or at least 19 guys in their mid-20’s who hadn’t eaten lately, tend to take more risks. What’s more, the blog post describes an experiment different than the one in the paper that it links to, which tells me that there must be two scientific studies out there supporting this exciting new finding.
It is exciting because it confirms a previously held belief of mine, that the problem we have in this country is too much food and not enough risk taking.
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web site. The agreements are printed in easy to see black and white and mailed to the card holder’s house.
Credit Cards, PF Blogs | Frank Curmudgeon | 
July 28, 2010 11:59 am | 
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