Running Account Credit Agreement Template for England and Wales

A Running Account Credit Agreement is a legal contract that establishes a revolving credit facility, allowing you to borrow, repay, and borrow again up to an agreed credit limit. Unlike a traditional loan where you receive a lump sum, this type of agreement provides ongoing access to funds as your financial needs change. In England and Wales, these agreements are heavily regulated to ensure fair treatment of consumers and proper disclosure of terms.

When do you need this document?

You need this agreement when setting up any form of revolving credit arrangement. Credit card companies use these agreements to establish the terms under which you can use your card and carry balances. Banks require them when offering overdraft facilities on current accounts, allowing you to spend beyond your account balance up to an agreed limit. Business suppliers often use running account credit agreements when providing trade credit to regular customers, enabling them to purchase goods or services and pay later. Property developers may enter these arrangements with contractors for ongoing construction projects where costs fluctuate. Personal finance companies use them for flexible credit lines that customers can access for various purposes without reapplying each time.

Key legal considerations

The credit limit clause determines the maximum amount you can borrow and should specify conditions under which this limit may be increased or decreased. Interest rate provisions must clearly state how interest is calculated, when it's charged, and whether rates are fixed or variable. Payment terms need to outline minimum payment requirements, due dates, and consequences of late payments. Default clauses should fairly define what constitutes a breach and the creditor's remedies, while ensuring they don't impose unreasonable penalties. Security provisions, if applicable, must properly describe any collateral and the creditor's rights over it. Termination clauses should specify how either party can end the agreement and what happens to outstanding balances.

Legal requirements in England and Wales

Under the Consumer Credit Act 1974, consumer credit agreements exceeding £60,260 fall outside regulated territory, while those below this threshold require FCA authorization and specific disclosure requirements. You must receive adequate pre-contract information including the annual percentage rate, total amount of credit, and your right of withdrawal. The agreement must be signed by you and contain all prescribed terms in the required format. The Consumer Rights Act 2015 protects against unfair contract terms, particularly those creating significant imbalances between your rights and the creditor's. Data protection obligations under the UK GDPR require proper handling of your personal information throughout the credit relationship. The creditor must also provide regular statements and notices as required by the Consumer Credit (Disclosure of Information) Regulations 2010, ensuring you stay informed about your account status and any changes to terms.