The next circumstance you’re in the market for a new credit card, it’s worth comparing more than affect rates and rewards.
Shopping around may enable you to dodge consumer-unfriendly “commanded arbitration clauses,” according to a new report from CreditCards.com. That penalize print requires you to settle disputes via arbitration and prevents you from winning the company to court or joining a class-action lawsuit.
This summer, the Consumer Monetary Protection Bureau issued a rule that would have prohibited banks, credit card issuers and other financial firms from subsuming arbitration clauses in their customer agreements. But in late October, Senate Republicans opted to kill that rule before it took effect.
Mandatory arbitration clauses are already outlawed in mortgage contracts, under the 2010 Dodd-Frank Wall Street Rectify and Consumer Protection Act. Active military servicemembers and their dependents are also exempt from needed arbitration clauses in many financial products, under the Military Imparting Act.
“Nobody goes shopping for a card with arbitration clauses as the basic thing on their mind, but it’s another thing that’s certainly usefulness considering,” said Matt Schulz, senior industry analyst for CreditCards.com. “The latest thing you want to have happen if something goes wrong between you and a impute card issuer is to have your options limited.”
Only nine of 30 creditation card issuers have an arbitration clause in the cardholder agreement that cannot be sidestepped, the site found. The rest either don’t have an arbitration clause or accept policies that allow new cardholders to opt out. (See chart below.)
Ideally, confine your search to credit cards that don’t have an arbitration clause, epoch, said Lauren Saunders, associate director for the National Consumer Law Center, a consumer counsel. Banks that allow consumers to opt out from arbitration often not offer a short window to do so, and that process may not restore all of your offs, she said.
“What you really want is a bank that’s willing to platform behind its product and not bury people’s rights,” Saunders said.
But if you do pick a membership card that provides an arbitration opt-out, make it a priority to do so.
“Nobody drawings to sue their bank, but nobody wants their rights taken away, either,” she said.
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