A credit card agreement is the most important document that cardholders should keep and know by heart.
It is usually available for viewing even before a cardholder applies for a credit card. It can even be downloaded
through the bank’s or card company’s website.
What is a credit card agreement? Why is it so important? A credit card agreement is a contract
required by federal law that defines and enumerates the guidelines that concern a credit card account. It is the
piece of paper that a cardholder signs to seal his agreement with the issuing bank and with their terms and
conditions. It is something that should not be disregarded for it contains all the valuable information that a
cardholder will need to know about his/her credit card.
What does a credit card agreement contain? Most credit card agreements follow the same format. They start with an
introduction which defines the type of document it is, the issuing bank, and its date of effectivity. What comes
next is usually a table showing how much interest rates and fees the cardholder will be paying with respect to
his/her card. This is where s/he will see the APRs for purchases, balance transfers, and cash advances. This table
will also indicate if penalty APRs are imposed by the bank if and when certain disclosures in the credit card
agreement will not be followed. It will also indicate the method of computation that the bank follows for all
transactions made through the card. If the card offers a grace period, it will be shown in this table and the
conditions that come with it. This part of the credit card agreement will also contain transaction fees for balance
transfers, cash advances, and foreign purchases. Finally, it will state how much penalty fees a cardholder will
have to pay for late payments or returned payments.
The succeeding parts of the credit card agreement will contain a definition of the terms used throughout the
agreement and clarifications about them. Then, it will state the responsibilities of the cardholder and the
corresponding sanctions should these responsibilities be defied. The credit card agreement will also contain the
contact information of the bank and the guidelines that cardholders should follow in case of problems such as
disputes or lost or stolen cards.
A credit card agreement will also include a lot of footnotes in fine print. This information is very crucial since
it states the conditions attached to certain privileges or promos that are not comprehensively discussed with the
cardholder. It is very important for a cardholder to read and understand a credit card agreement from top
to bottom, especially the fine print. Before signing, they should make sure to have an employee of the bank explain
everything clearly and in a language that they can comprehend.
Source: Credit Cards For People With Bad Credit Rating
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