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Cardholder Agreement

Reviewed by Sujaini | Updated on Sep 30, 2020

Catalogue

What is a Cardholder Agreement?

A cardholder agreement is a document that a credit card holder receives detailing the terms and agreements of the card. A cardholder agreement describes the annual percentage rate (APR) paid by the cardholder, the calculation behind minimum payments and the rights of the cardholder when disputes arise.

The arrangement specifies the provisions for all expenses, such as an annual fee, a balance transfer fee, account termination fees, late payment fee, over-the-limit fee, and any additional penalties. The policy also specifies procedures with respect to any incentives, such as airline miles or cashback.

Cardholder Agreement Break Down

The credit card issuer must accurately disclose the terms of the card without misleading statements. In the past, courts had ruled in favour of customers when the issuer made exaggerated claims that it did not satisfy in its ads, given the less-than-advantageous terms specified by the cardholder agreement. These agreements describe the rights and obligations of both the credit card holder and the credit card issuer.

What's Inside of a Cardholder Agreement?

The details of cardholder agreements vary with the issuer, but in general, they contain similar information. An average cardholder agreement allows the holder to use a credit card to buy goods and services, transfer balance, get cash withdrawal, pay for recurring transactions, and make foreign purchases.

It almost always outlines fees assessed for these transactions. For example, issuers usually charge a flat fee for cash withdrawals or for transactions in a foreign country.

The Cardholder Agreement often details the terms and conditions under which the issuer can close the account of a customer. This defines the payment responsibilities of the issuer, including the duration of the grace period, how to make payments, and the duty on each declaration to make at least the minimum payment.

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