We use them all the time—to make purchases, shop online, and collect points. They’re practical and convenient. But before you get a credit card, learn about your rights and how to protect your information.
Your rights are set out in a “cardholder agreement”
“For my daughter’s 19th birthday, I offered to co-sign for her first credit card. It’s important to get an early start in building up a good credit history. As well, having a credit card will help her become more financially responsible and independent.”
– Brenda, Port Coquitlam
The deal with a credit card is this: you get what you want now, and promise to pay later. If you haven’t paid within a certain period of time, the folks at Visa or American Express—or whatever card you’re using—will charge you interest. The time before interest charges kick in is called the “grace period”.
Under the law in BC, credit cards are a form of “open credit”. This means the cardholder isn’t borrowing a fixed or agreed-upon amount of money. Credit is available as needed, up to a certain point. Most credit cards come with a credit limit. The cardholder can’t spend beyond it.
The card issuer sets the terms of the credit card in a contract, called the “cardholder agreement”.
You must accept the terms of the cardholder agreement before using the card. There are two types of agreement:
- between merchants and consumers
- between financial institutions and consumers
In merchant agreements, a store issues its own card directly to the consumer. The card usually only works at that store (or chain of stores).
In financial institution agreements, the card can be used at any business that accepts the card.
Make sure you’re comfortable with the terms of the cardholder agreement before using a credit card. The moment you buy something on the card, you effectively accept all the terms of the agreement, including the interest rate and any non-interest charges. It is not an excuse to say that you didn’t read or understand the agreement.
You must be given certain information
Under the law in BC, a credit card issuer must tell you certain things in the credit card application form. The form must include:
- the interest rate
- the grace period
- any non-interest charges
This information usually appears in a box near the top of the application form. Or it may be in a separate document that’s attached to the form. The information box should look something like this.
When you receive your card, you also receive a copy of the cardholder agreement. (The issuer is bound by law to include it.) The agreement must set out all the terms and conditions of the credit card, including:
- the minimum periodic payment
- the credit limit
- how interest is calculated
- the cardholder’s maximum liability if the card is lost or stolen
Usually, this information is also set out in a box at the beginning of the agreement.
Credit card issuers aren’t allowed to send you a credit card you didn’t ask for. See our page on getting a credit card you never asked for.
If there’s a change to your agreement
An increase in your credit limit
Under Canadian law, the card issuer can’t raise the credit limit on your credit card without your permission—you have to authorize the increase. And it’s not enough that you tell a representative you want a higher credit limit. They need to confirm your consent in writing. If you consent orally, the issuer must send you written confirmation no later than with your next monthly statement.
Other changes to your agreement
For other changes to your cardholder agreement, the card issuer must inform you of the changes.
For the following changes, they can inform you in your next monthly statement:
- a decrease in the credit limit
- a decrease in the interest rate or any other charge
- an increase in the length of the grace period
- a change in a floating interest rate
For all other changes to your cardholder agreement, the card issuer must tell you about the change at least 30 days before the change takes effect.
You will receive a monthly statement
Under the law in BC, a credit card issuer must send a cardholder a monthly statement of account. You can choose to receive the statement electronically or by mail.
The monthly statement must contain certain information, including:
- the period covered by the statement
- the outstanding balance at the beginning of the period
- a description of each charge and transaction during the period
- the outstanding balance at the end of the period
- the due date for payment
- the amount that must be paid within the grace period to avoid interest
If you don’t recognize a merchant’s name on your statement, check the amount against your recent receipts. (Save your receipts! Or take a picture of them with your phone.) Sometimes the name of a business shows up differently on credit card statements.
If you get a joint credit card
Most credit card issuers offer joint credit card accounts. These accounts involve two or more parties to the agreement. The multiple cardholders share the liability. The terms of liability are spelled out in the cardholder agreement. There are three main ways to create a joint credit card account:
- as authorized users
- as co-applicants
- as co-signer or guarantor
As an authorized user
An authorized user is allowed to use another person’s credit card account but isn’t (usually) liable for the bills. The person who applies for the credit card, and whose name is on the agreement, is called the “primary cardholder”. In BC, the primary cardholder must be 19 or older.
As a primary cardholder, you:
- can add and remove authorized users to your credit card at any time
- are responsible for paying the money owed on the credit card
Any purchases made by an authorized user on the account will show up in the primary cardholder’s monthly statement. Authorized users get a separate card with their name on it. The card is linked to the primary cardholder’s account.
Some credit card issuers allow you and another person to apply for a credit card together. Each co-applicant has the same access to the account and is equally responsible for any money owing.
Each of the co-applicants must be given certain information about the account by the card issuer. (See above.) Each co-applicant is also entitled to receive a monthly statement.
As a co-signer or guarantor
Someone who would not normally qualify for a credit card may be able to get one with a co-signer or guarantor. A co-signer or guarantor doesn’t usually have access to the account, but may end up being responsible for paying the debt. See our guidance on co-signing or guaranteeing a loan.
Usually, activity on a joint account won’t affect an authorized user’s credit score. This is because the primary cardholder is ultimately liable for the debt. This is not the case for co-applicants, co-signers and guarantors. See our guidance on credit scores.
Step 1. Keep a record of your account numbers
Find a secure place for your credit card account numbers. Note the expiration dates on the cards. Write down the toll-free customer service number in case you lose your cards. (It’s on the back of the card in tiny print.).
Step 2. Don’t lend your card to anyone
Don’t let anyone—including your spouse or children—use your credit card. Under the law in BC, you’re protected from full liability if your card is lost or stolen. (See our guidance on if your credit card is lost or stolen.) But if you voluntarily give up your card and PIN number to someone, you lose this protection.
Step 3. Shred credit cards you’re finished with
Before you throw away an expired or unwanted credit card, cut it up or shred it. This disables the magnetic stripe on the card. Dispose of the bits separately so no one can piece together the card number.
If your card has a chip, make sure you destroy it before throwing the card away. If your card is made of metal, contact the issuer and ask how to properly dispose of it. They may ask that you return it to them by mail.
Shredding your bank statements and receipts when you’re done with them is also a good idea.
Step 4. Be careful about giving out your credit card number
Never give your card number over the phone or online unless you’re positive the representative is actually the employee of a reputable company. If you haven’t purchased anything from the company before, search online for reviews or complaints against it.
Step 5. Check your bills often
Review your credit card bills as soon as they come in. If you use online banking, make it a habit to check your account frequently. That way you’ll catch any fraudulent activity on your account as soon as possible.
Step 6. Report questionable charges
If there are any charges on your statement you suspect are fraudulent, contact your card issuer right away. They can put a fraud alert on your card, preventing any additional charges.
See our guidance on scams and identity theft.
When is my credit card activated?
Usually with your first purchase. However, you may have to activate your card over the phone or online. Ask your card issuer about their activation procedure.
I co-signed a cardholder agreement. What am I liable for?
As a co-signer on a credit card account, you and the primary cardholder will typically share “joint and several liability” for any debt, including interest and applicable charges. This means you both become immediately responsible for the full amount owing on the card. The card issuer can demand the full balance on the account from either of you, regardless of who actually made the purchase and incurred the debt.
For more information, see our page on co-signing or guaranteeing a loan.
The Financial Consumer Agency of Canada can help if you think a major Canadian financial institution has violated your rights.
Consumer Protection BC can help if you don’t think a credit card issuer disclosed the required information when you entered into a cardholder agreement with the issuer.