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.


=Buying goods 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.”


==What is buying on credit?==
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.
Buying on credit means you pay for what you buy over time, not when you buy it. 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==
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.
The agreement may be called several things, like a ''conditional'' sales agreement, 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 if you have a true lease, usually for 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.
===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


==What rights does the seller or lender have under a security agreement?==
With your credit card, you also receive a copy of the cardholder agreement. (The issuer is bound by law to include it.)
Generally, lenders can take back the secured item, sell it, and still be paid for any amount still owing. But consumer goods are different. Consumer goods are things bought mainly for personal, family or household use. If you default (or stop making payments) on a security agreement for consumer goods, the seller or lender must choose to seize (take) the goods or sue you for what you owe. They can’t do both. And they can seize goods only if they have a written agreement with you.


==What happens if you make a late payment?==
The agreement must set out the card’s terms and conditions, including:
Credit, lease, and other types of security agreements must show what fees and interest charges you will have to pay if you make late or only partial payments. If a lender accepts late or partial payments, it’s not a new offer of credit. You will still have to pay compound interest and sometimes other default fees.
* the minimum periodic payment
* the credit limit
* how interest is calculated
* your maximum liability if the card is lost or stolen


==What can the seller or lender do if you’ve paid most of your debt and then default?==
===You’ll receive a monthly statement===
For consumer goods, once you have paid back two-thirds of the loan (excluding a mortgage), the lender or creditor cannot seize the item without going to court to get a court order.
The card issuer must send you a statement every month. You can choose to get it by mail or email.


==What happens if the seller or lender seizes the goods?==
The monthly statement must contain important information, 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.


For consumer goods, you can bring your account up to date, or “reinstate” the security agreement, by paying, within 20 days, the amount in arrears plus the seller’s or lender’s reasonable costs of seizure. If you reinstate the security agreement, you get the piano back. You can also pay the rest of your full debt to get the piano back.
* 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


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.
==Protect yourself!==


If they sell the piano, 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. After the sale, the seller must pay you any amount left over after they have been fully paid.
===Step 1. Keep a record of your account numbers===


==Four important points about seizures==
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’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 pay you (or in some cases, your other creditors) any money left over.


=Credit cards=
===Step 2. Don't lend your card to anyone===


==What is the difference between buying on credit and buying with a 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.
Generally, when you buy goods with a credit card, the bank does not have a security interest, and it cannot seize the goods if you don’t make a credit-card payment. So if you buy a piano with your credit card, you own the piano at the time you buy it, but you owe the money plus interest to the credit-card company.  


==What law deals with credit cards?==
===Step 3. Shred credit cards you're finished with===
BC’s ''[http://www.bclaws.ca/civix/document/id/complete/statreg/04002_00 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==
Shredding your bank statements when you’ve read them is also a good idea.
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 4. Be careful about giving out your credit card number===
The ''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?==
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 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 5. Check your bills often===
Bank and debit cards aren’t covered by the ''[http://www.bclaws.ca/civix/document/id/complete/statreg/04002_00 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.


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


==What law deal with credit reporting agencies (sometimes called credit bureaus)?==
===Step 6. Report questionable charges===
BC has two laws that regulate the use of personal credit information. Both the ''[http://www.bclaws.ca/civix/document/id/complete/statreg/04002_00 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). They also protect your privacy by controlling access to that information.


==No one can ask for a personal credit report on you without your consent==
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.
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==
===Go deeper===
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.
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].


==Some kinds of information can’t be included in a credit report==
==Helpful agencies==
A credit report can’t show information about:
If you run into trouble, these agencies may be able to help.
*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==
:'''Financial Consumer Agency of Canada'''
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 steps to check the information and respond to you within 30 working days. If you’re right, they must correct it as soon as possible. They must also 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 must make a note in 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 report.
: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]


==More information==
:'''Consumer Protection BC'''
Contact [http://www.consumerprotectionbc.ca/ Consumer Protection BC] at 1.888.564.9963 toll-free.
: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]


[updated October 2017]
:'''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]


'''The above was last reviewed for accuracy by Wendy Andersen and edited by John Blois.'''
:'''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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