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Question

X got a new charge card because it advertised a low interest rate on unpaid balances. He transferred his balance from another credit card to the new card. After six months, the card increased the rate and sent out a mailing that stated that, by continuing to use the card, the customer agreed to the rather significant change. X thought the mailing was just more junk mail and never read it. He continued to use the card, paid the minimum payment for a couple of months, and after three months, finally noticed the change. The difference in the interest rate will cost him a substantial amount of money. Do we have a valid contract here? What options are available for X?

Submitted: 55 days and 18 hours ago.
Category: Legal
Value: $15
Status: CLOSED
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Posted by Dave Kennett 55 days and 18 hours ago.

Answer

Dear kasia rothfuss - Once the card was used a contract was created. It is the responsibility of the cardholder to read the contract and any notices etc so I see no way X can get out of the contract. The best option is to get the balance paid as quickly as possible in order to avoid the interest or to get another card and transfer the balance to a lower rate.

 

Unless the credit card company will agree to a lower rate I don't believe X has an argument. Most of these rates are advertised as "introductory" or some other adjective in order to get customers t switch. I always think of it as a legal form of "bait and switch" but I can't change the law.

 

Dave Kennett

55 days and 18 hours ago.

Reply

actually, this is just imaginary case from a textbook ( im a paralegal student). I thought that there was no CONSIDERATION here? i am wrong? also, i was thinking that we actually have two contracts here the frist one and the one later modified ( with highter interest rate). or was it counteroffer??

Posted by Dave Kennett 55 days and 18 hours ago.

Answer

This is an executory contract that offers the availability of credit as the consideration and when the credit is used it becomes a contract. I don't have a copy of the contract to review but generally these contracts or offers contain language giving the credit card company the right to raise the rate after a certain amount of time. The fact that the customer doesn't read the language is not a defense.

 

Dave

55 days and 18 hours ago.

Reply

ok, my last question.. im really confused by consideration part in this case.. isnt is sufficient???

Accepted Answer

It is sufficient. Once the customer uses the card he is accepting the terms of the contract. In this case I would assume he would also have had to OK a transfer of the balance as part of the introductory offer so that would certainly be an acceptance of the contract terms.

 

Dave

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Expert: Dave Kennett
Pos. Feedback: 99.5 %
Accepts: 
Answered: 9/27/2009

Lawyer (JD)

25 years experience in general law, including real estate, criminal, traffic, and domestic relations

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