As though credit card companies need any more heft to leverage over consumers, the U.S. Supreme Court has ruled that consumer credit card disputes need not go to court but must instead be settled out of court, in arbitration. This is a big win for credit card companies, as settling in arbitration is far less costly than them having to face the legal ramifications of a lawsuit.

This decision is in response to a case involving Synovus Financial Corp. and Compu Credit Holdings Corp. They allegedly preyed on consumers with weak credit, offering the Visa Aspire credit card, with a $300 credit limit, only to charge $257 in fees the first year.

As reported by The Consumerist‘s Mary Beth Quirk:

“As big businesses prefer to do, the two companies had been seeking to hold customers to arbitration instead of settling in court, citing a binding clause in the credit card agreement…. The ruling overturned one made by a U.S. appeals court in San Francisco that had said the Credit Card Repair Organizations Act was meant to bar arbitration…. Justice Anton Scalia wrote for the majority — Justice Ruth Bader Ginsberg was the only one to dissent — and said that the 1996 law doesn’t preclude enforcement of an arbitration agreement.”

This development should serve as a warning to anyone with weak credit. While taking out new credit cards can be a great means of rebuilding your credit score, it can be far more costly in the long run if you do not choose wisely.

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