You may not realize it, but you’re automatically agreeing to the terms in your credit card agreement when you accept the 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.
What’s in a Credit Card Agreement
Credit card agreements aren’t the easiest to read. A 2018 study from Science Direct found that the average credit card agreement is written on an an 8th to 9th grade level, higher than the average American reading level. More complicated credit card agreements were associated with higher finance charges. Even though credit card agreements can be lengthy and complex, you need to know what you’re agreeing to when you use using your credit card. After all, it’s a legally binding agreement.
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 The 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 cardYour credit limit and information about how your credit card issuer can change itDetails about using your credit card in another countryHow your minimum payment is calculatedOptions for paying your credit card balance and how your payments are appliedHow your credit card is reported to the credit bureausHow your information is shared or kept privateChanges the credit card issuer can make to your accountWhat constitutes a default and what happens if you defaultHow to handle a lost credit cardHow to close your accountHow to handle billing disputes with the credit card issuerThe 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.
