What is a Credit Card Agreement?

The credit card agreement or card member agreement is a contract that defines terms and conditions in using a credit card. It also explains penalties that may apply if you miss payments or violate other terms of the agreement. Credit card companies send these agreements to customers when they first issue the credit card with instructions to keep the document in case it is needed for future reference.

This article lists down terms and conditions in the Credit Card Agreement; essential elements of this agreement; and, a summary of the new credit card regulations.

What are Terms and Conditions in the Credit Card Agreement?

Although there are many credit cardholders, few of them actually bother to read and understand the credit card agreement. These state the terms and conditions under which the credit card could be used. The cardholder agreement is a legal contract between the lender and the borrower that highlights all terms and conditions under which the credit could be used. This agreement specifies the rights and obligations of customers under the contract they sign. Do not hesitate to get in touch with a customer care official with your credit card company. You can ask him to explain all clauses of the agreement that you cannot understand. It is their job to make sure you are fully informed of the contractís terms and conditions. Once you affix your signature on the document, you automatically assume full responsibility for everything that is written in the cardholder agreement.

What are the Essential Elements in this Agreement?

The most important items in the agreement are the following: annual interest rates; minimum monthly payments; grace period; penalty fees and charges for late or overdue payments; credit insurance terms and conditions; annual service fee; and, credit limit. The agreement will specify the use of the credit card, the dispute resolution process, and personal information disclosure. The agreement may also contain clauses on minimum payment due, finance charges, finance charges on purchases and cash advances, information about lost and stolen cards, amendments and change terms, and service fees.
Once you have read all terms and conditions in the cardholder agreement, you have to ask your credit card issuer if the card is sufficiently protected and whether it is accepted by most merchants. You also need to consider if the limit on your credit card is sufficient to meet your financial. The other things to find out are bonuses such as cash back rewards, air miles or free liters of fuel in gasoline stations and hypermarkets. Remember that the cardholder agreement that you are required to sign before getting a credit card is a legally binding document. You are required to abide by the terms and conditions after placing your signature. If for some reason you find it difficult to read the terms and conditions, do not hesitate to ask someone to read them for you, if necessary, or print them out in larger fonts before you sign the agreement. Once you sign, you will receive a copy of your agreement. Keep it with your other financial papers, just in case you need to have a second look at the terms and conditions.

What are Credit Card Regulations?

Canadian credit card companies must disclose all fees and interest rates on credit card applications. They also need to reveal for each bill, how long it will take to pay off the total debt if the customer only makes the minimum required payment each month. Canadian law requires credit card companies to grant a 21-day grace period on new purchases after a customer pays the balance in full. This means that if the customer does not currently owe any money to a credit card company, the company cannot charge interest on new purchases until 21 days after the purchases have been made. Companies may offer a grace period of more than 21 days if they wish. Credit card companies may not raise a customer's credit limit without the customer's permission. They also may not charge over-the-limit fees on purchases if the reason the customer has exceeded his credit limit is that a merchant has placed a hold on specific transactions.

Important Considerations

The essential point here for credit card holders is not just to use their credit cards without understanding the terms and conditions of the agreement they forged with the credit card company. This will help them to avoid any legal headaches in the future such as failure to pay bills for purchases that have accumulated.


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