Credit cards, fine print, and your rights

When you accept a credit card, or any credit agreement, you enter a legal contract laden with rights and responsibilities for both parties.

A spokesperson at Experian, a leading credit bureau, explains the importance of understanding the finer details of this contract, and knowing your rights as a borrower.

Tip: How you handle your credit card repayments affects your credit health. Check your credit score to see where you stand.

Study the fine print

It’s up to you as a borrower to fully understand the contractual specifics of any credit agreement you enter. This applies to credit cards as much as it does to any other form of borrowing.

“You can find [much of the finer detail] in your credit card’s terms and conditions, or your [bank] cardholder agreement,” the Experian spokesperson explains.

Important details to look out for include:

• Fees. An annual fee, often payable when you receive your card, is usually prominently displayed on your application and in the cardholder agreement. A balance transfer fee of 3% to 5% is generally charged if you transfer money to the card. You are also likely to incur foreign transaction fees if you use the card outside the country, or purchase online in a foreign currency.
• Purchase annual percentage rate. This is the interest charge applied to the remaining balance when you don’t pay your credit card in full by the due date.
• Cardholder benefits. Your credit card may come with purchase and travel benefits. Make sure you understand how these work to ensure you’re protected in the event of unauthorised purchases, or if other issues arise.

Know your rights and responsibilities

The National Credit Act (NCA) gives credit card users, and other debtors, certain rights.

“When consumer rights are breached, it’s an offence in terms of credit law, which gives a consumer legal recourse through established dispute channels,” says the Experian spokesperson.

Specifically, the NCA protects your right:

• To apply for credit
• To be free from discrimination in the granting of credit
• To be told why credit was not granted, should you ask
• To receive a free copy of your credit agreement, in plain language
• To have your personal and financial information kept confidential
• To understand all fees, costs, interest rates, instalments, and any other details
• To say “no” to increases in your credit limit
• To decide if you wish to be informed about products or services via direct marketing
• To apply for debt counselling, should you require it

“Your signature on a credit agreement confirms that you agree to meet your obligations by repaying your debt according to the contract,” says the spokesperson.

“By implication, you confirm understanding of your rights and responsibilities.” 

Tip: Feeling the financial pressure of increasing interest rates? Consider debt consolidation.