Do You Know about Credit Card Repo Clauses?
According to a recent study of credit card terms in the United States, many card agreements allow banks to repossess items you have purchased to make up for money you owe on your account.
More than 200 publicly-filed credit card agreements have “repo clauses” in them, which turn the items you purchase into security for your debt. While few banks actually put these clauses into effect, they legally have the opportunity to do so because of your signed agreement.
Repo rights remain in effect even after a cardholder files bankruptcy. You could still be at risk if your debt is dismissed in your case. The bank will no longer come after you for the money you owe, but they could attempt to recover your property.
Not only can credit card companies take your items back, but they can also charge you for whatever it takes to get those items sold. If the items must be listed online to sell to someone else, you could be charged a selling fee for the inconvenience.
This is just one of the many reasons why it is important to read your credit card terms thoroughly before signing up for an account. You should not just look at the APR and the rewards program and sign without looking at the entire agreement.