Different time limits on store credit cards may protect consumers

As we mentioned in another post, the statute of limitations for a credit card debt is six years in Minnesota. This means that a debt collector can only sue a consumer on a credit card debt within the six years after default on the card. Once six years have passed, there's very little a collector can do to get the money. Not very many people know that there is a separate, shorter statute of limitations of four years for store credit cards. This is because store cards are governed by the Uniform Commercial Code (UCC), a set of laws that govern installment sales of goods, among other things. So figure out whether the shorter limitations period applies, we need to figure out whether the card was a sale of goods (four years) or money loaned (six years). Some cards are tricky--for example, Walmart has both a store credit card and a Visa card. To figure out which limitations period applies, we ask the following questions:

  • Did the card have a Visa/Mastercard/Amex/Discover logo? If not, the four-year period may apply. If it's been years since you cut up the card and you can't remember whether there was a logo on it, we can generally use the card number to find out. Amex cards begin with the numbers "34" or "37." Visa cards begin with 4. Mastercard begins with 5. Discover begins with "6011" or "65." If the account number began with any other numbers, it most likely was a store card.

  • Did you apply for the card at the cash register? If you did, it's easier to argue that you bought goods on installment and therefore it was a store card. If you applied for the card from home, it may be more likely that it was a credit card.

  • Could you take a cash advance on the card? Store credit cards don't allow you to take cash advances. Credit cards generally do. If you couldn't take a cash advance, the four-year period may apply.

If a collector has sued you after the end of the limitations period, not only is it a defense to the lawsuit, but in some cases it is a violation of the Fair Debt Collection Practices Act if they knew that the debt was too old to be sued on.