What does Card member agreement mean?

In order to own and use a credit card and an account, the consumer is required to sign a card member agreement, which states the conditions and terms of the specific account. The agreement is mandatory by federal law. This client disclosure is also a binding agreement between clients and the card issuer itself. This document has to include annual fees, the minimum payment formula on a monthly basis, and the annual percentage rate, or APR for short.

The agreement must also dispute resolution processes. The card issuer can change some points in the card member agreement at any time, provided that the institution issues a notice to the cardholder in advance.

Clients on the other hand have the option of canceling the credit card and the account, if they do not agree with the changes made to the agreement. In these cases consumers must pay off all existing balances before they cancel the card, which are still under the previous terms of agreement.