Duhaime's Law Dictionary

Cardholder Agreement Definition:

A contract presented by a credit card company or through an agent, usually a bank, setting out the terms of the consumer's use of and liability for the credit card.

A contract which is written by the credit card issuer (eg. VISA or American Express) and which is presented to the applicant-consumer and in which is set out the essential terms, responsibilities and liabilities associated with the credit card.

Some standard terms of a cardholder agreement:

  • The credit card belongs to the credit card company and not the consumer, thus allowing the cancellation of the card at the credit card company's discretion;
  • A limit of credit which the consumer must not exceed, such as, for example, $10,000;
  • A statement of interest on amounts owing, when it is payable and how exchange rates will apply to adjust for use of the credit card in foreign jurisdictions;
  • How the cardholder is liable for misuse of the card even if by third-parties;
  • A requirement to pay a monthly minimum as set out in the monthly bill;
  • The consumer agrees to keep his or her personal indentification number (PIN) confidential; and
  • A dispute resolution process or the election of a jurisdiction to har any disputes.

These agreements are powerful tools in the hands of the credit card companies, and not without judicial sanction. In Bank of Montreal, a father was held liable for the full amount owing on his son's credit card which he had applied for under his card and for which the cardholder agreement held:

"If (an)other MasterCard card(s) on the MasterCard account is/are requested and issued to any other person(s), each such other person shall also be a Cardholder for the purposes of this Agreement and there shall be one MasterCard account for all such MasterCard cards. Each such Cardholder shall be jointly and severally liable with the other(s) for any indebtedness incurred through use of any such MasterCard card."

Justice Killeen wrote:

"I see no escape for any cardholder under this most explicit language of the agreement even where the expenditures have been rung up through the fraudulent activities or scheme of one of the cardholders. While (the father) has argued forcefully that the credit limit for the card should be an outer boundary for the liability of (the father) as the primary cardholder, nevertheless, the language of the agreement at large says that all cardholders must be jointly and severally liable for all expenditures and not just those that fall within the credit limit."




  • Bank of Montreal v Demakos (1996) 31 OR 757
  • Duhaime, Lloyd, Credit Card Law: David v Goliath
  • Ogilvie, M., Bank and Customer Law in Canada (Toronto: Irwin Law, 2007), pages 375-366
  • Royal Bank of Canada v Budaveri (2003) 44 BLR 3d 147 (ONSC)

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