Nav: Home

Language used on credit card websites the hardest to understand

January 25, 2019

New research led by the University of East Anglia (UEA) reveals how easy it is for consumers to understand the language used on personal finance websites.

The study analysed the text of websites for payday lenders, personal loans and credit cards in the UK and found that while payday loans sites are easier to read, all are difficult.

Credit card websites are hardest to read and contain more complex terminology, though no significant differences are found between payday loans and personal loans.

The UK payday loan market is substantial - the world's second largest after the United States - and the loans themselves have been associated with financial hardship and other socially negative outcomes. Because of this, money saving websites typically suggest customers turn to cheaper forms of credit, such as credit cards.

All credit providers are subject to the same advertising and promotions principles, and the same rules for consumer credit conduct of business. However, there are less strict rules regarding finance readability, for example compared to those limiting the level of complexity in the descriptions of medical products.

As well as looking at how easy it is to understand the websites, the study examined whether cheaper forms of debt are as easy to understand as payday loans. The findings are published in the journal Economic Letters.

Lead author Matt Burke, a postgraduate researcher at UEA's Norwich Business School, said the study reflects recent interest expressed by UK regulator the Financial Conduct Authority in exploring issues relating to financial readability. The study was co-authored by Dr John Fry, of Manchester Metropolitan University.

"Amid much concern over financial literacy, and its associated negative social outcomes, we provide the first known measurement of readability in consumer finance, something regulators have found helpful in other areas," said Mr Burke.

"Lender websites are responsible for the majority of payday loans, and in our sample only they conform to minimally accepted readability levels. Borrowers with different risk profiles are offered access to different products. As such there are occasions where payday loans may provide a genuine economic function.

"One possibility is that readability is simply higher for higher-cost products and reading comprehension is, inevitably, negatively linked with risk. However, credit card websites include more financial terminology and are generally less comprehensible compared to other lenders."

Mr Burke added: "Future research needs to consider how the readability and linguistic accessibility of these websites affects consumer wellbeing."

Research on readability in finance is limited and has to date focussed mainly on financial disclosures, consumer insurance contracts and annual reports. For this study the homepages of 31 payday lenders were analysed, as this is where the consumer can gather information and begin an application. The equivalent webpages were also selected for 31 credit card and 31 personal loan sites.

The ratios of financial words to total words, complex words to total words, and of complex financial words to total complex words were calculated. The average numbers of words per sentence and the overall word count were also analysed.

The Fog Index, a formula designed to measure the level of reading difficulty of any text, was used to test readability. Of the sampled studied only the payday loans websites would pass basic tests for readability. The personal loan and credit card websites both failed these, and would also compare unfavourably to accepted communication standards in medicine.

There is evidence of differences between lender types in terms of both the proportion of financial words used and the webpage length. There is more variation in the length of payday webpages, and the extent to which credit card websites include complex financial terminology is more varied.

The authors also suggest that some credit card and personal loan companies may have moderated the extent to which they use financial terminology in order to share qualitative similarities to payday-loan websites.
'How easy is it to understand consumer finance?', Matt Burke and John Fry, is published in Economic Letters, Volume 177, April 2019, Pages 1-4.

University of East Anglia

Related Language Articles:

Why the language-ready brain is so complex
In a review article published in Science, Peter Hagoort, professor of Cognitive Neuroscience at Radboud University and director of the Max Planck Institute for Psycholinguistics, argues for a new model of language, involving the interaction of multiple brain networks.
Do as i say: Translating language into movement
Researchers at Carnegie Mellon University have developed a computer model that can translate text describing physical movements directly into simple computer-generated animations, a first step toward someday generating movies directly from scripts.
Learning language
When it comes to learning a language, the left side of the brain has traditionally been considered the hub of language processing.
Learning a second alphabet for a first language
A part of the brain that maps letters to sounds can acquire a second, visually distinct alphabet for the same language, according to a study of English speakers published in eNeuro.
Sign language reveals the hidden logical structure, and limitations, of spoken language
Sign languages can help reveal hidden aspects of the logical structure of spoken language, but they also highlight its limitations because speech lacks the rich iconic resources that sign language uses on top of its sophisticated grammar.
Lying in a foreign language is easier
It is not easy to tell when someone is lying.
American sign language and English language learners: New linguistic research supports the need for policy changes
A new study of the educational needs of students who are native users of American Sign Language (ASL) shows glaring disparities in their treatment by the U.S Department of Education.
The language of facial expressions
University of Miami Psychology Professor Daniel Messinger collaborated with researchers at Western University in Canada to show that our brains are pre-wired to perceive wrinkles around the eyes as conveying more intense and sincere emotions.
The universal language of hormones
Bioinformatics specialists from the University of W├╝rzburg have studied a specific class of hormones which is relevant for plants, bacteria and indirectly for humans, too.
Stretching language to its limit
A disregard for human traditions, the brutality of predation, sacrifice, and sexual desire are ingrained in languages across cultures.
More Language News and Language Current Events

Best Science Podcasts 2019

We have hand picked the best science podcasts for 2019. Sit back and enjoy new science podcasts updated daily from your favorite science news services and scientists.
Now Playing: TED Radio Hour

Rethinking Anger
Anger is universal and complex: it can be quiet, festering, justified, vengeful, and destructive. This hour, TED speakers explore the many sides of anger, why we need it, and who's allowed to feel it. Guests include psychologists Ryan Martin and Russell Kolts, writer Soraya Chemaly, former talk radio host Lisa Fritsch, and business professor Dan Moshavi.
Now Playing: Science for the People

#538 Nobels and Astrophysics
This week we start with this year's physics Nobel Prize awarded to Jim Peebles, Michel Mayor, and Didier Queloz and finish with a discussion of the Nobel Prizes as a way to award and highlight important science. Are they still relevant? When science breakthroughs are built on the backs of hundreds -- and sometimes thousands -- of people's hard work, how do you pick just three to highlight? Join host Rachelle Saunders and astrophysicist, author, and science communicator Ethan Siegel for their chat about astrophysics and Nobel Prizes.