What must be done before using a payment card according to federal law?

Before using a payment card, federal law requires that all terms and conditions must be disclosed to cardholders. This is essential for several reasons, primarily to ensure transparency and protect consumer rights. The Truth in Lending Act (TILA) and the Credit Card Accountability Responsibility and Disclosure Act (CARD Act) mandate that issuers provide clear and concise information regarding interest rates, fees, rewards programs, and other significant terms associated with the credit card.

By disclosing these terms and conditions, consumers can make well-informed decisions about their financial commitments and understand the implications of using their payment cards. This step is crucial in promoting responsible borrowing and enhances consumer protection by providing the necessary information to avoid deceptive practices.

While obtaining authorization from financial institutions is essential for processing transactions, it is not a preliminary requirement embedded in federal law for the issuance or use of the card itself. Similarly, conducting a credit check or establishing a customer loyalty program may be customary practices but do not form part of the legal prerequisites before a card can be used.