Freedom Debt Relief Examines Credit Cards and Arbitration Clauses
What do you look for in the credit cards you choose? Is a low-interest rate important to you? Or do you try to find the one with the best “perks” like airline miles or cash back bonuses? How about the credit card’s arbitration clause? Now, you probably paused for a moment with the last one – arbitration clause? If you aren’t familiar with whether your credit card has one or not, then you are not alone. Most people do not factor this into their decision when choosing a card. In fact, it was this gap in knowledge between consumers and debt collectors that actually got Freedom Debt Relief co-founder, Andrew Housser, in the business. What he saw was that consumers hardly stood a chance against the might and legal language wielded by the industry and it has been his goal to help educate and get the best terms for consumers. And while it may not make the top of your list of things to consider, you should at least be aware of a credit card’s policy on arbitration before you choose it. Freedom Debt Relief looks further at this little-known clause that could lead to big problems down the road.
What is an Arbitration Clause?
If you are not familiar with this, we’ll explain. An arbitration clause is sometimes included in the terms of service of your credit card. Basically, what it means is that if there is a dispute between you and the credit card company, you are required to resolve the issue outside of court – through arbitration. Freedom Debt Relief reports that one of the benefits of this for the credit card companies is that it helps to prevent class action lawsuits.
In arbitration, there is no jury and no chance that you can appeal. So, as a consumer, you may give up some rights that you would have had without this clause. A study by the Consumer Financial Protection Bureau reports that consumers generally do not receive as much compensation through arbitration as they could have otherwise seen.
Do All Credit Cards Have This Clause?
No – not all credit cards use an arbitration clause. In fact, Freedom Debt Relief reveals that some of the biggest credit card issuers do not use arbitration clauses. These include Chase Bank, Capital One, and Bank of America. Altogether, nine of the top 30 credit card companies do not include one of these clauses.
However, even though the remaining 21 do use them, some of them allow you to opt out. These include Discover Card, American Express, and Citibank.
How Do You Opt Out?
If you discover that your credit card does include an arbitration clause, you may be able to opt out. However, according to Freedom Debt Relief, if you have held the card for some time, you’ve probably missed your window to do so. Generally, you can only opt-out within the first 30 to 90 days of receiving the card. The exact amount of time varies from card to card.
The way that you can do this is by sending a written letter to the credit card company within a specified period of time that states your desire to opt out. Keep in mind that not all credit cards have this option. Nine of the major credit cards will not allow you to opt out including USAA, Wells Fargo, and Barclays.
What Are the Options if You Cannot Opt Out?
According to Freedom Debt Relief, your options will vary depending on your situation. If you are currently in good standing with your card and have good credit, you can always transfer the balance to another card that does not have an arbitration clause (or allows you to opt out). If you are in serious debt or you are struggling to even make your monthly payments, then you could seek professional help or counseling. As you begin to explore your options, try to continue making at least your minimum payments each month until you have resolved the issue.