Get It in Writing: What Your Credit Card Agreement Says

Credit cards can be a good way to build a stable credit history while also providing you with a way to make purchases without handling cash. Using a credit card is also convenient and gives you the opportunity to build a positive relationship with the issuing bank. But a credit card is only as good as the agreement that governs your terms of use and spells out exactly what you and the issuing bank will be responsible for doing while held to the agreement.

It is important to read credit card agreements before agreeing to terms

Hopefully you aren’t one of the many consumers who don’t take the time to read your credit card agreements in their entirety. Not reading the terms before you agree to accept the credit card can result in financial issues as you start to use the card. According to Russian Times, a Russian bank recently discovered just how costly not reading a credit card agreement can be when a man wrote his own credit card agreement and the bank signed and returned it, agreeing to terms it had not read and understood.

What does your credit card agreement say?

There is invaluable information contained in your credit card agreement and when applying for credit cards, you may want to review the various credit card agreements available online through bank websites and consumer assistance sites. Reading your credit card agreements is so crucial, the Board of Governors of the Federal Reserve System and the Consumer Financial Protection Bureau have compiled sample credit card agreements and made them accessible to consumers.

Items listed in your credit card agreement

• Your promise to pay

  One of the first things you may see on your credit card agreement is something reminding you your use of the card constitutes your promise to pay all outstanding balances and related fees, regardless of whether you close your account or not. There will also be instructions on how late payments or non-payments will be handled.

• The annual percentage rate for your card

  The APR tells you how much it will cost you to make credit card charges, an annual rate expressed in a percentage. If your card offers an introductory APR for a certain period of time and then it later changes, this will also be disclosed in your agreement.

• Fees

  Your credit card agreement will tell you, in detail, what fees will be charged to your account. This is important information to have access to so you understand what the fees are, when they will be charged, and how you can dispute them if you feel they have been charged in error. There will also be descriptions of the fees.

• Details on card usage

  The agreement will also detail the ways in which you can use your card. For instance, you will see information about your monthly statements, your credit limit on the card, how transfer balances may be handled, and how often you can make ATM transactions and at what cost. You will likely also see information on how to dispute charges on your card statement and how to close the account.

• How your payments will be handled

  Credit card agreements detail how your payments to your credit card account will be handled. The accruing of interest is typically explained, as well as how the issuing bank can contact you if you do not make a payment or go into default on your account.

• Your liability if credit card fraud occurs

  If your card is stolen or you are the victim of credit card fraud, credit card agreements will tell you what to do if your card information is compromised. For the most part, if you report the loss or incident as soon as possible, your liability will be reduced. You should also inform the credit reporting agencies of the theft so they can help further protect your credit.

Credit card agreements are the contract between you and the credit card issuer, spelling out the rights and responsibilities of your using the card and their issuing the card to you. If there are ever any issues, make sure to refer to your credit card agreement so you can determine your course of action for a solution.

Joy Mali is an active blogger who is fond of writing articles on Credit Protection and advising people to immediate steps by informing authorities if your card is lost or stolen. Follow her on Twitter to know more on credit card agreement must read.