Difference between revisions of "Getting a Credit Card"

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{{REVIEWEDPLS | reviewer = [https://www.bcuc.com/ Anna Fung, KC], BC Utilities Commission|date= October 2019}} {{Dial-A-Law TOC|expanded = money}}
We use them all the time — to make purchases, shop online and collect points. But before you get a credit card, learn your rights and how to protect yourself.
==Understand your legal rights==
 
==What you should know==
===Your rights are set out in a cardholder agreement===
The deal with a credit card is this: you get to buy things now in exchange for a promise to pay later. Basically, the card issuer is giving you a loan. If you fail to pay the money back by a certain date, you’re charged interest on top of it. The longer you take to pay back what you borrowed, the more it costs you.
 
The credit card issuer (Visa or Mastercard, for example) allows you to spend up to a certain amount. That’s called your “credit limit.”
 
The important terms of your credit card come in a contract called the '''cardholder agreement'''. You must accept the terms of the cardholder agreement before using the card.
 
When you buy something with a new credit card, you’re saying you accept the terms of the cardholder agreement. It’s no excuse to say you didn’t read the agreement. Or didn’t understand it.
 
===You must be given certain information===
The card issuer must tell you certain things in the credit card application form. This includes:
* the interest rate
* the grace period (the time before interest charges kick in)
* any non-interest charges


{{Dial-A-Law TOC|expanded = credit}}
With your credit card, you also receive a copy of the cardholder agreement. (The issuer is bound by law to include it.)
When you buy “on credit”, you buy now and pay later. This can range from taking out a loan for a new car to using a credit card to buy groceries. Your rights can differ in important ways depending on how you buy on credit.  


==Understand your legal rights==
The agreement must set out the card’s terms and conditions, including:
* the minimum periodic payment
* the credit limit
* how interest is calculated
* your maximum liability if the card is lost or stolen


===Your rights to what you buy can vary===
===You’ll receive a monthly statement===
'''Buying on credit''' means you get something now in exchange for a promise to pay later. Your rights to the item you buy can vary depending on the terms of the promise.
The card issuer must send you a statement every month. You can choose to get it by mail or email.


In some cases, you might not own the item until you finish paying for it. Say you want to buy a piano. You might agree with the seller to pay for it over two years, with interest. You get the piano immediately. But the seller might have you sign an agreement saying the seller still owns the piano until you make all the payments.
The monthly statement must contain important information, including:


In other cases, you might own the item right away, but the seller or lender gets special rights to it. Say you want to buy a new car. You might get a loan from your bank, and agree to pay the loan back (plus interest) over a certain time period. The bank might have you sign an agreement saying if you default on the loan (such as by missing a payment), the bank can take the car to cover what you owe.
* the period covered by the statement
* the balance at the beginning of the period
===When you buy with a credit card===
* a description of each charge and transaction during the period
When you buy something with a '''credit card''', you similarly buy now and pay later. But when you buy with a credit card, you own the item right away. And the credit card company can’t take the item if you don’t make a credit card payment.
* the balance owing at the end of the period
* the due date for payment
* the amount you have to pay before the grace period ends to avoid interest


So if you buy that piano (or that new car) with your credit card, you own it right away. You have to pay the purchase price to the credit card company (plus interest if you don’t pay off your purchase with your next payment). But the credit card company can’t take the piano if you fail to make your payments. (They can [[Collection of Debts (Script 250)|collect the debt]] in other ways, however.) For more on your rights relating to credit cards, see our information on [[Credit Cards (Script 247)|credit cards (no. 247)]].
==Protect yourself!==


===If you sign a security agreement===
===Step 1. Keep a record of your account numbers===
When you buy something on credit, you typically sign a '''security agreement'''. This agreement may be called various names (such as a “conditional sales agreement” or a “lease with an option to purchase”). But they all work in a similar way. Basically, it will say you give the other party a '''security interest'''. This is a property interest you give them to ensure you pay the money you owe them. The property is called '''collateral'''. The debt becomes a “secured debt” and the other party becomes a “secured creditor”. 


====If you default====
Find a safe place for your credit card account numbers. Write down the expiration dates on the cards. Keep the toll-free customer service number handy in case you lose your cards.
If you default on a secured debt (such as by missing a payment), a secured creditor can take the collateral and sell it. This is also called “seizing” or “repossessing” the collateral. They can also sue you for the amount owing on the debt.


====If the collateral is “consumer goods”====
===Step 2. Don't lend your card to anyone===
Under the [http://canlii.ca/t/8495 law in BC], two rules kick in to protect you if the property you put up as collateral is “'''consumer goods'''”. This is property that’s “used or acquired for use primarily for personal, family or household purposes”.


For this type of collateral, if you default, the secured creditor can seize the property. Or they can sue you for the amount owing on the debt. But they can’t do both. This is called the “'''seize or sue rule'''”. It means the creditor has to decide whether to seize the collateral or take you to court.  
Under the law in BC, your liability for a lost or stolen card is limited. That usually means you’re protected. But if you give your card and PIN to someone, you lose this protection.


The “'''two-thirds rule'''” comes into play if you’ve paid back at least two-thirds of what you owe on a secured debt relating to consumer goods. In this case, the secured creditor needs a court order before seizing the collateral. If you’ve paid back less than two-thirds, the creditor can seize the collateral without going to court.
===Step 3. Shred credit cards you're finished with===


===If a secured creditor seizes goods===
Shredding your bank statements when you’ve read them is also a good idea.
If a secured creditor seizes collateral under a security agreement, they must follow a procedure set out [https://www.canlii.org/en/bc/laws/stat/rsbc-1996-c-359/latest/rsbc-1996-c-359.html#sec59_smooth under the law].


====If the creditor wants to sell the collateral====
===Step 4. Be careful about giving out your credit card number===
The secured creditor must give you at least 20 days’ written notice before selling the collateral. The notice must include the amount required to pay off the debt, as well as the amount in “arrears”. Arrears are payments that were due but have not yet been paid. 


If the collateral was “consumer goods”, the notice must spell out that as long as you pay off the arrears plus the creditor’s expenses of seizing the property, you may '''reinstate''' the security agreement. The creditor must then return the seized property.
Don’t give out the number over the phone or online until you’re certain you’re dealing with a reputable company. If the company’s new to you, search for complaints against it online before you buy anything.


If you don’t pay the amounts set out in the creditor’s notice, the creditor can proceed to sell the collateral. If they do, they must use commercially reasonable means to get a reasonable price for it. This doesn’t mean they must advertise in every paper from here to Calgary, but they must use reasonable efforts to get a fair market price.  
===Step 5. Check your bills often===


After the sale, the creditor must pay you any amount left over after they are fully paid.
Review your credit card bills as soon as you get them. If you use online banking, check your account frequently.


====If the creditor wants to keep the collateral====
===Step 6. Report questionable charges===
A creditor who plans to keep collateral they seized must give you written notice of their proposal to do so. You then have 15 days to give them a “notice of objection” if you don’t want them to keep the property. If you do so, the creditor must then sell the collateral, following the rules described above.


==Common questions==
If there are any charges on your statement you think might be fraudulent, contact your card issuer right away. They can put a fraud alert on your card and prevent any more charges.


===What happens if I make a late payment?===
===Go deeper===
Credit agreements must say what fees and interest charges you will have to pay if you make a late payment or a partial payment. If a creditor accepts a late or partial payment, it doesn’t change your obligations for future payments.
Want to dive deeper into your rights and how to prevent problems with a credit card? [https://www.peopleslawschool.ca/getting-credit-card/ Check out our in-depth information on this topic].
==Get help==


===If you’re concerned with the cost of buying on credit===
==Helpful agencies==
When you borrow money to buy something, there are laws [https://www.canlii.org/en/bc/laws/stat/sbc-2004-c-2/latest/sbc-2004-c-2.html#sec57_smooth requiring creditors to disclose] all borrowing costs. '''Consumer Protection BC''' oversees these laws.
If you run into trouble, these agencies may be able to help.
:Toll-free: 1-888-564-9963
:Web: [http://www.consumerprotectionbc.ca/ consumerprotectionbc.ca]


===If you’re struggling with debt===
:'''Financial Consumer Agency of Canada'''
The '''Credit Counselling Society''' is a non-profit society that helps people better manage their money and debt.
:Deals with complaints against federally-regulated banks and trust companies.
:Toll-free: 1-888-527-8999
:Call 1-888-461-3222
:Web: [http://www.nomoredebts.org/ nomoredebts.org]
:[https://www.canada.ca/en/financial-consumer-agency Visit website]


:'''Consumer Protection BC'''
:If you don’t think a credit card issuer disclosed the required information.
:Call 1-888-564-9963
:[https://www.consumerprotectionbc.ca/ Visit website]


===Legal advice===
A legal professional can help you explore options and decide on your next step.


[updated October 2017]
:'''Lawyer Referral Service'''
:Helps you connect with a lawyer for a complimentary 15-minute consult to see if you want to hire them.
:Call 1-800-663-1919
:[https://www.accessprobono.ca/our-programs/lawyer-referral-service Visit website]


'''The above was last reviewed for legal accuracy by [Wendy Andersen, Digby Leigh & Company, and Laura Cox, Consumer Protection BC Wendy Andersen], Digby Leigh & Company, and [http://www.consumerprotectionbc.ca/ Laura Cox], Consumer Protection BC.'''
:'''Access Pro Bono's Free Legal Advice'''
:Volunteer lawyers provide 30 minutes of free legal advice to people with low or modest income.
:Call 1-877-762-6664
:[https://www.accessprobono.ca/get-legal-help Visit website]


----
:'''People’s Law School'''
----
:See more options for free or low-cost legal help.
:[https://www.peopleslawschool.ca/options-legal-help/ Visit website]


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Latest revision as of 00:53, 7 November 2023

This information applies to British Columbia, Canada. Last reviewed for legal accuracy by Anna Fung, KC, BC Utilities Commission in October 2019.
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We use them all the time — to make purchases, shop online and collect points. But before you get a credit card, learn your rights and how to protect yourself.

Understand your legal rights

What you should know

Your rights are set out in a cardholder agreement

The deal with a credit card is this: you get to buy things now in exchange for a promise to pay later. Basically, the card issuer is giving you a loan. If you fail to pay the money back by a certain date, you’re charged interest on top of it. The longer you take to pay back what you borrowed, the more it costs you.

The credit card issuer (Visa or Mastercard, for example) allows you to spend up to a certain amount. That’s called your “credit limit.”

The important terms of your credit card come in a contract called the cardholder agreement. You must accept the terms of the cardholder agreement before using the card.

When you buy something with a new credit card, you’re saying you accept the terms of the cardholder agreement. It’s no excuse to say you didn’t read the agreement. Or didn’t understand it.

You must be given certain information

The card issuer must tell you certain things in the credit card application form. This includes:

  • the interest rate
  • the grace period (the time before interest charges kick in)
  • any non-interest charges

With your credit card, you also receive a copy of the cardholder agreement. (The issuer is bound by law to include it.)

The agreement must set out the card’s terms and conditions, including:

  • the minimum periodic payment
  • the credit limit
  • how interest is calculated
  • your maximum liability if the card is lost or stolen

You’ll receive a monthly statement

The card issuer must send you a statement every month. You can choose to get it by mail or email.

The monthly statement must contain important information, including:

  • the period covered by the statement
  • the balance at the beginning of the period
  • a description of each charge and transaction during the period
  • the balance owing at the end of the period
  • the due date for payment
  • the amount you have to pay before the grace period ends to avoid interest

Protect yourself!

Step 1. Keep a record of your account numbers

Find a safe place for your credit card account numbers. Write down the expiration dates on the cards. Keep the toll-free customer service number handy in case you lose your cards.

Step 2. Don't lend your card to anyone

Under the law in BC, your liability for a lost or stolen card is limited. That usually means you’re protected. But if you give your card and PIN to someone, you lose this protection.

Step 3. Shred credit cards you're finished with

Shredding your bank statements when you’ve read them is also a good idea.

Step 4. Be careful about giving out your credit card number

Don’t give out the number over the phone or online until you’re certain you’re dealing with a reputable company. If the company’s new to you, search for complaints against it online before you buy anything.

Step 5. Check your bills often

Review your credit card bills as soon as you get them. If you use online banking, check your account frequently.

Step 6. Report questionable charges

If there are any charges on your statement you think might be fraudulent, contact your card issuer right away. They can put a fraud alert on your card and prevent any more charges.

Go deeper

Want to dive deeper into your rights and how to prevent problems with a credit card? Check out our in-depth information on this topic.

Helpful agencies

If you run into trouble, these agencies may be able to help.

Financial Consumer Agency of Canada
Deals with complaints against federally-regulated banks and trust companies.
Call 1-888-461-3222
Visit website
Consumer Protection BC
If you don’t think a credit card issuer disclosed the required information.
Call 1-888-564-9963
Visit website

Legal advice

A legal professional can help you explore options and decide on your next step.

Lawyer Referral Service
Helps you connect with a lawyer for a complimentary 15-minute consult to see if you want to hire them.
Call 1-800-663-1919
Visit website
Access Pro Bono's Free Legal Advice
Volunteer lawyers provide 30 minutes of free legal advice to people with low or modest income.
Call 1-877-762-6664
Visit website
People’s Law School
See more options for free or low-cost legal help.
Visit website
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