What's in Your Credit Card Agreement

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A credit card is more than just a piece of plastic that lets you spend. It's a way to access whatever credit limit the bank has agreed to allow you to borrow against. Your credit account comes with some stipulations that you have to stick to if you want to keep using your credit card and avoid having your credit affected. Each credit card comes with a credit card agreement which is a type of contract that outlines the terms, conditions, pricing, and penalties of the credit card.

Whether you know it or not, you're agreeing to the terms in your credit card agreement when you use your credit card. What the credit card issuer says, goes. There's not much room for negotiation.The credit card issuer can change the credit card terms at any time, with advance notice. Continuing to use your credit card means that you agree to the changes in the terms. You may be able to reject certain parts of your credit card agreement, like the arbitration clause, but it depends on the credit card issuer.

What's in a Credit Card Agreement

Credit card agreements aren't the easiest document to read. According to a 2016 study from CreditCards.com, the average credit card agreement is written on an 11th grade reading level. That's fairly difficult, especially since more than half the American population is below a 9th grade reading level. The average credit card agreement is also about 4,900 words long and would take 20 minutes to read.

But, since a credit card agreement is a legally binding contract, you need to know what you're agreeing to by using your credit card.

Pricing Information

The credit card agreement will list pricing information for the credit card that outlines when and how you will be charged interest and fees on the credit card. At a minimum, your credit card agreement has to list:

  • the annual percentage rate for each type of balance that can be carried – purchases, balance transfers, and cash advances - and the penalty rate if it applies
  • the index rate to which a variable rate is tied, e.g. the prime rate
  • finance charge information including the minimum finance charge, the finance charge calculation method, and when you may not be charged a finance charge
  • grace period
  • the fees you can be charged and when they will be charged

Other Credit Card Information

In addition to pricing information, your credit card agreement will include every detail of your credit card including:

  • the types of transactions you can make on your credit card
  • your credit limit and information about how your credit card issuer can change it
  • details about using your credit card in another country
  • how your minimum payment is calculated
  • options for paying your credit card balance and how your payments are applied
  • how your credit card is reported to the credit bureaus
  • how your information is shared or kept private
  • changes the credit card issuer can make to your account
  • what constitutes default and what happens if you default
  • how to handle a lost credit card
  • how to close your account
  • how to handle billing disputes with the credit card issuer
  • the legal body who enforces the credit card agreement

How to Find Your Credit Card Agreement

Federal law requires all credit card issuers with more than 10,000 credit card accounts to list a copy of their credit card agreements online. Your credit card issuer should also provide you with a copy of the credit card agreement for your account when you request it. Finally, the Consumer Financial Protection Bureau maintains a database that includes generic credit card agreements from more than 300 credit card issuers.