Difference between revisions of "Getting a Credit Card"

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{{Dial-A-Law Blurb}}
{{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==


{{Dial-A-Law TOC|expanded = credit}}
==What you should know==
Many people can’t pay cash for consumer goods like a new car or a major appliance. They get a loan or use a credit card so they can buy now and pay later. But if they can’t make their payments, they face legal problems and their credit rating is often affected. People also worry if their credit card is lost or stolen and used by others. This script discusses these issues.
===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.


==What does it mean to buy something on credit?==
The credit card issuer (Visa or Mastercard, for example) allows you to spend up to a certain amount. That’s called your “credit limit.”
Say you want to buy a piano, so you agree with the seller to pay for it over two years, with interest. You get the piano immediately, but the seller still owns the piano until you make all the payments. Or say that you want to buy a new car, but the dealer won’t finance it or you want to deal with your own bank. So you apply for a bank loan and sign an agreement where the bank pays the dealer for the car, and you pay the bank back for the cost of the car, plus interest, over a certain number of months. In both cases, you are buying something on credit.


==When you buy something on credit, you typically sign a “security agreement”==
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.
The specific agreement may be called several things, like a “conditional sales agreement” or a “chattel mortgage” or a “lease with an option to purchase”. But the type and name of agreement aren’t important because they all work in a similar way. Basically, the agreement will say that you give the seller or lender a “security interest” in the goods as security for what you still owe—like when you give the bank a mortgage on your house.


The only exception is where you have a true lease, usually relating to a car or a large piece of equipment, where you pay monthly for the right to use it. In this case, you have no ownership rights in the item at all, and under the lease agreement, you would have no right to buy the item at the end of the term, although you do have the right to use the car during the lease term.
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.


==What rights does the seller or lender have under a security agreement?==
===You must be given certain information===
Generally speaking, a lender can take back the item secured, sell it and still look to be paid any deficiency. But “consumer goods” are treated differently. Consumer goods are things used or bought for use primarily for personal, family or household purposes. If you default (or stop making payments) on a security agreement for consumer goods, the seller or lender generally has to choose either to seize (take) the goods or sue you for what you owe. The seller can’t do both.
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


==What can the seller or lender do if you’ve paid most of your debt and then default?==
With your credit card, you also receive a copy of the cardholder agreement. (The issuer is bound by law to include it.)
With consumer goods, after you have paid back two-thirds of the loan, the lender cannot seize the goods. In BC, once a consumer has paid back two-thirds of the total value of a loan (excluding a mortgage), then the lender or creditor is no longer entitled to seize the item without going to court and obtaining a court order.


==What happens if the seller or lender seizes the goods?==
The agreement must set out the card’s terms and conditions, including:
Consider the piano example, where you’ve agreed to pay for the piano over two years. After one year, your employer lays you off and you can’t make the payments. The security agreement lets the seller come to your home and seize the piano. The seller chooses to seize the piano but, by law, cannot sell it until giving you 20 days “notice of disposition” and waiting until the end of the 20 days. Section 59 of BC’s ''[http://bclaws.ca/civix/document/id/complete/statreg/96359_01 Personal Property Security Act]'' lists all the information the seller must give you in the notice.
* the minimum periodic payment
* the credit limit
* how interest is calculated
* your maximum liability if the card is lost or stolen


In response (and assuming the goods seized are consumer goods), you may bring your account up to date, or “reinstate” the security agreement, by paying, within 20 days, the amount in arrears plus the seller or lender’s reasonable costs of seizure. If you reinstate the security agreement, you get the piano back. You also have the right in any situation to pay the balance of your full debt to get the piano back.
===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.


But if you don’t pay the amount due in the seller’s notice within 20 days, the seller can either sell the piano or keep it.
The monthly statement must contain important information, including:


If the seller chooses to sell the piano, then they owe a duty to you to use commercially reasonable means to get a reasonable price from the sale of the piano. This doesn’t mean they have to advertise in every paper from here to Calgary, but they must use reasonable efforts to try and sell the piano for a fair market price. After the sale, any amount left over after the seller is paid must be returned to you.
* 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


==Four important points about seizures:==
==Protect yourself!==
*If you’ve paid at least two-thirds of the total price, a seller needs a court order before seizing the property.
*Sellers who seize property must give you a “notice of proposal” if they plan to keep it. You then have 15 days to give them a “notice of objection” if you don’t want them to keep the property, and they must then sell it.
*A seller who seizes and sells the property but doesn’t recover the full amount you owe, cannot sue you for the rest of what you owe (if the goods are consumer goods).
*From the sale money, the seller can keep the amount you owe, plus reasonable costs to seize, store and sell the property, but must then return any left-over money to you, or in some cases, to your other creditors.


==What about credit cards—what law protects you?==
===Step 1. Keep a record of your account numbers===
BC’s ''[http://bclaws.ca/civix/content/complete/statreg/1944036832/04002/969908263/?xsl=/templates/browse.xsl Business Practices and Consumer Protection Act]'' protects the public in two ways. The Act controls unsolicited credit cards—the ones sent to people who didn’t apply for them—and it also limits the responsibility of people whose cards are lost or stolen.


==You don’t have to accept credit cards you never asked for==
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 get this type of card, you don’t have to accept it, and if you don’t, you aren’t responsible for it. However, if you use an unsolicited credit card, you are telling the sender that you’re accepting it, and you’re then responsible for what you buy with it.


==What happens if you lose your credit card or it’s stolen?==
===Step 2. Don't lend your card to anyone===
The ''[http://bclaws.ca/civix/content/complete/statreg/1944036832/04002/969908263/?xsl=/templates/browse.xsl Business Practices and Consumer Protection Act]'' says that you don’t have to pay for anything bought with your lost or stolen credit card after you tell the card issuer, such as VISA or MasterCard, that it’s lost or stolen. You can tell the issuer by phone or by registered mail. If someone uses your card before you report it lost or stolen, the Act limits your liability to $50—even if your agreement with the credit card issuer says differently. In cases of theft, many card issuers don’t even charge the $50, in the interest of good customer relations.


==What if you let someone use your credit card?==
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.
If you let someone use your card, then later change your mind and say they can’t use it, things are different. For example, say you give your card and personal identification number or PIN to a friend or relative to pay your bill at a bank machine. Later, without your authorization, that person uses your credit card and PIN to get cash advances from a bank machine. You’re responsible for this debt.


==Bank and debit cards are treated differently from credit cards==
===Step 3. Shred credit cards you're finished with===
Bank and debit cards aren’t covered by the ''[http://bclaws.ca/civix/content/complete/statreg/1944036832/04002/969908263/?xsl=/templates/browse.xsl Business Practices and Consumer Protection Act]''. So you’re not protected by the $50 limit if someone steals your bank or debit card and PIN and uses them to get money from your account.


==What about credit reporting agencies (sometimes called credit bureaus)?==
Shredding your bank statements when you’ve read them is also a good idea.
BC has two laws that regulate the use of personal credit information. Both the ''[http://bclaws.ca/civix/content/complete/statreg/1944036832/04002/969908263/?xsl=/templates/browse.xsl Business Practices and Consumer Protection Act]'' and the ''[http://bclaws.ca/civix/document/id/complete/statreg/03063_01 Personal Information Protection Act''] control how credit bureaus handle personal credit information (such as your marital status, approximate income, and assets and debts owing) and also protect your privacy by controlling access to that information.


==No one can ask for a personal credit report on you without your consent==
===Step 4. Be careful about giving out your credit card number===
Normally, when you seek credit, you agree that the lender can get your credit report—even if you don’t realize you’re agreeing to this. Application forms for loans, credit cards and jobs usually have small print saying that you authorize any credit bureau to give a credit report on you. But there are situations where your credit information can be released to law enforcement agencies, the courts (by court order) or the director of credit reporting without your apparent consent.


==Two major credit bureaus in Canada: Equifax and Trans Union Canada==
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.
Both these credit bureaus collect personal credit information and sell it to banks, department stores, employers and others, and you have the right to know what information they have on you. Usually, both agencies have similar information, so if you want to check your credit rating and history, you probably need to check the records of just one of them. You can call [http://www.consumer.equifax.ca/home/en_ca Equifax] toll-free at 1.800.465.7166. [http://www.transunion.ca/ca/personal/personal_en.page Trans Union Canada]’s toll-free phone number is 1.800.663.9980.


==Some kinds of information can’t be included in a credit report==
===Step 5. Check your bills often===
A credit report can’t show information about:
*a criminal offence (unless you’ve been convicted of it)
*a criminal conviction, once six years have passed since the conviction or since your release or parole if you were in prison
*race, religion, ethnic origin or political affiliation
*a bankruptcy, if it’s been more than six years since the discharge, unless it’s a second bankruptcy


==You can correct any inaccurate information in your credit file==
Review your credit card bills as soon as you get them. If you use online banking, check your account frequently.
If you think something in your file is wrong, you can send a letter about the error, and the credit reporting agency must take reasonable step to check the information and respond to you within 30 working days. If you’re right, they have to correct it as soon as possible. They also have to send a correction to everyone who received a report on you in the past year. If the agency doesn’t make the correction you asked for, they have to make a note to your file that you asked for the information to be corrected, so anyone who gets a future report will see this note. Also, if there’s anything in your file that you think should be explained, you have the right to place a statement of up to 100 words on the file, to be given to anyone who obtains a future report.


==More information==
===Step 6. Report questionable charges===
*See the [http://www.legalaid.bc.ca/publications/pub.php?pub=17 manual Consumer Law] and Credit/Debt Law published by the [http://www.legalaid.bc.ca/ Legal Services Society]. This manual is for paralegals, legal information counsellors, and lawyers with clients who have consumer/debt problems.
*You can also contact [http://www.consumerprotectionbc.ca/ Consumer Protection BC]. Call 1.888.564.9963 toll-free.


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.


[updated April 2015]
===Go deeper===
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].


{{REVIEWED | reviewer = Laura Cox and Wendy Anderson}}
==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
:[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.
:'''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]
:'''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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