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| {{REVIEWEDPLS | reviewer = [http://www.leighco.ca/wendy-andersen Wendy Andersen], Digby Leigh & Company, and [http://www.consumerprotectionbc.ca/ Laura Cox], Consumer Protection BC|date= October 2017}} {{Dial-A-Law TOC|expanded = money}} | | {{REVIEWEDPLS | reviewer = [https://www.bcuc.com/ Anna Fung, KC], BC Utilities Commission|date= October 2019}} {{Dial-A-Law TOC|expanded = money}} |
| 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.
| | 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== |
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| | ==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. |
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| | The credit card issuer (Visa or Mastercard, for example) allows you to spend up to a certain amount. That’s called your “credit limit.” |
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| ==Understand your legal rights== | | 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. |
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| | 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. |
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| | ===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 |
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| | With your credit card, you also receive a copy of the cardholder agreement. (The issuer is bound by law to include it.) |
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| | 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 |
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| | ===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. |
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| | The monthly statement must contain important information, including: |
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| | * 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 |
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| | ==Protect yourself!== |
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| | ===The steps involved=== |
| | We offer tips to prevent problems. |
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| ===Your rights to what you buy can vary===
| | '''Step 1.''' Keep a record of your account numbers |
| 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.
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| 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.
| | '''Step 2.''' Don’t lend your card to anyone |
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| 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.
| | '''Step 3.''' Shred credit cards you’re finished with |
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| ===When you buy with a credit card===
| | '''Step 4.''' Guard your credit card number |
| 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.
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| 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 [[Collecting a Debt (No. 250)|collect the debt]] in other ways, however.) For more on your rights relating to credit cards, see our information on [[Credit Cards (No. 247)|credit cards (no. 247)]].
| | '''Step 5.''' Check your bills often |
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| ===If you sign a security agreement===
| | '''Step 6.''' Report questionable charges |
| 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”.
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| ====If you default==== | | ===More on each step=== |
| 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.
| | '''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. |
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| ====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”. | | '''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. |
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| 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.
| | '''Step 3. Shred credit cards you're finished with |
| | '''Shredding your bank statements when you’ve read them is also a good idea. |
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| 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 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. |
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| ===If a secured creditor seizes goods===
| | '''Step 5. Check your bills often |
| 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]. | | '''Review your credit card bills as soon as you get them. If you use online banking, check your account frequently. |
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| ====If the creditor wants to sell the collateral====
| | '''Step 6. Report questionable charges |
| 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 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. |
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| 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.
| | ===Go deeper=== |
| | Want to dive deeper into your rights and how to prevent problems with a credit card? [https://www.peopleslawschool.ca/everyday-legal-problems/money-debt/credit-cards/getting-credit-card Check out our in-depth information on this topic]. |
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| 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. | | ==Helpful agencies== |
| | ===If you run into trouble, these agencies may be able to help.=== |
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| After the sale, the creditor must pay you any amount left over after they are fully paid.
| | :'''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] |
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| ====If the creditor wants to keep the collateral====
| | :'''Consumer Protection BC''' |
| 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.
| | :If you don’t think a credit card issuer disclosed the required information. |
| | :Call 1-888-564-9963 |
| | :[https://www.consumerprotectionbc.ca/ Visit website] |
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| ==Common questions== | | ===Legal advice=== |
| | A legal professional can help you explore options and decide on your next step. |
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| ===What happens if I make a late payment?===
| | :'''Lawyer Referral Service''' |
| 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.
| | :Helps you connect with a lawyer for a complimentary 15-minute consult to see if you want to hire them. |
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| | :Call 1-800-663-1919 |
| ==Get help==
| | :[https://www.accessprobono.ca/our-programs/lawyer-referral-service Visit website] |
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| ===If you’re concerned with the cost of buying on credit===
| | :'''Access Pro Bono's Free Legal Advice''' |
| 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.
| | :Volunteer lawyers provide 30 minutes of free legal advice to people with low or modest income. |
| :Toll-free: 1-888-564-9963 | | :Call 1-877-762-6664 |
| :Web: [http://www.consumerprotectionbc.ca/ consumerprotectionbc.ca]
| | :[https://www.accessprobono.ca/get-legal-help Visit website] |
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| ===If you’re struggling with debt===
| | :'''People’s Law School''' |
| The '''Credit Counselling Society''' is a non-profit society that helps people better manage their money and debt.
| | :See more options for free or low-cost legal help. |
| :Toll-free: 1-888-527-8999 | | :[https://www.peopleslawschool.ca/options-legal-help/?utm_source=beagle Visit website] |
| :Web: [http://www.nomoredebts.org/ nomoredebts.org]
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