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Before you pick a new credit card, check to see if it has this fine print

  • So-called mandatory arbitration clauses in card agreements require cardholders to settle disputes through arbitration rather than via court.
  • In a CreditCards.com review of 30 credit card issuers, only nine have arbitration clauses that cardholders cannot avoid.
  • Experts say you may want to look for a card that does not have an arbitration clause rather than one that offers a way to opt-out.
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John Lamb | Getty Images

The next time you're in the market for a new credit card, it's worth comparing more than interest rates and rewards.

Shopping around may enable you to dodge consumer-unfriendly "mandatory arbitration clauses," according to a new report from CreditCards.com. That fine print requires you to settle disputes via arbitration and prevents you from taking the company to court or joining a class-action lawsuit.

"Nobody plans to sue their bank, but nobody wants their rights taken away, either." -Lauren Saunders, National Consumer Law Center

This summer, the Consumer Financial Protection Bureau issued a rule that would have banned banks, credit card issuers and other financial firms from including arbitration clauses in their customer agreements. But in late October, Senate Republicans voted to kill that rule before it took effect.

Mandatory arbitration clauses are already prohibited in mortgage contracts, under the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. Active military servicemembers and their dependents are also exempt from mandatory arbitration clauses in many financial products, under the Military Lending Act.

"Nobody goes shopping for a card with arbitration clauses as the primary thing on their mind, but it's another thing that's certainly worth considering," said Matt Schulz, senior industry analyst for CreditCards.com. "The last thing you want to have happen if something goes wrong between you and a credit card issuer is to have your options limited."

Only nine of 30 credit card issuers have an arbitration clause in the cardholder agreement that cannot be avoided, the site found. The rest either don't have an arbitration clause or have policies that allow new cardholders to opt out. (See chart below.)

Credit card issuers' use of arbitration clauses

Card issuer
Arbitration?
Opt out?
Opt-out period - days
American Express Yes Yes 45
Banco Popular Yes Yes 90
Bank of America No N/A N/A
Barclaycard Yes No N/A
BB&T Yes No N/A
Capital One No N/A N/A
Chase Bank No N/A N/A
Citibank Yes Yes 45
Citizens Bank NA Yes Yes 45
Comenity Yes Yes 30
Credit One Bank Yes No N/A
Discover Yes Yes 30
Fifth Third Bank Yes No N/A
First National Bank of Omaha Yes No N/A
First Premier Bank Yes Yes 30
Key Bank Yes Yes 60
Merrick Bank Yes Yes 60
Navy Federal Credit Union No N/A N/A
Pentagon Federal Credit Union No N/A N/A
PNC Bank Yes Yes 45
Regions Bank Yes No N/A
State Employees Credit Union (N.C.) No N/A N/A
State Farm Bank No N/A N/A
Suntrust Bank Yes Yes 45
Synchrony Bank Yes Yes 60
TD Bank No N/A N/A
US Bank Yes No N/A
USAA Federal Savings Bank Yes No N/A
Wells Fargo Yes No N/A
World's Foremost Bank (Cabela's) No N/A N/A
SOURCE: CreditCards.com

Ideally, narrow your search to credit cards that don't have an arbitration clause, period, said Lauren Saunders, associate director for the National Consumer Law Center, a consumer advocate. Banks that allow consumers to opt out from arbitration often only offer a short window to do so, and that process may not restore all of your rights, she said.

"What you really want is a bank that's willing to stand behind its product and not bury people's rights," Saunders said.

But if you do pick a card that provides an arbitration opt-out, make it a priority to do so.

"Nobody plans to sue their bank, but nobody wants their rights taken away, either," she said.