Promissory Note Sample for Credit Card Payment

INSTITUTIONAL PROMISSORY NOTE & CREDIT CARD SETTLEMENT AGREEMENT

DOCUMENT ID: PN-CC-202X-08A
EFFECTIVE DATE: [Effective Date]
VERSION: 4.2
GOVERNING JURISDICTION: State of [State], United States

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1. STATUTORY & LEGAL COMPLIANCE NOTICE

CRITICAL LEGAL NOTICE: This Promissory Note and Credit Card Settlement Agreement ("Agreement") is an institutional-grade financial instrument designed to evidence and secure a commercial or consumer debt obligation through scheduled credit card transactions. Legal enforceability of promissory notes, automatic recurring card charges, interest caps, and acceleration clauses varies significantly by federal, state, and local jurisdiction.

The drafting party and executing parties acknowledge that usury laws, the Truth in Lending Act (TILA), the Electronic Fund Transfer Act (EFTA), and Payment Card Industry Data Security Standards (PCI-DSS) govern electronic payment processing and credit extensions. Legal counsel should be retained in the applicable jurisdiction to verify compliance with local banking regulations, consumer protection statutes, and debtor rights prior to execution.

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2. PARTIES & RECITALS

This Promissory Note (the "Note") is entered into and made effective as of [Effective Date] (the "Effective Date"), by and between:

MAKER / DEBTOR:
[Client Full Legal Name], having a principal place of residence or business located at [Principal Address] (hereinafter referred to as the "Maker").

PAYEE / CREDITOR:
[Company Full Legal Name], having a principal place of business located at [Company Principal Address] (hereinafter referred to as the "Payee").

RECITALS:
WHEREAS, the Maker is justly indebted to the Payee in the aggregate principal sum of [Amount in USD] United States Dollars ($[Numerical Amount]) (the "Principal Amount"), arising from commercial transactions, services rendered, goods delivered, or an antecedent debt settlement; and

WHEREAS, the Maker desires to defer payment of the Principal Amount and any accrued interest under the terms, covenants, and conditions set forth herein, and has authorized the Payee to charge the designated credit card on a recurring basis to satisfy said indebtedness;

NOW, THEREFORE, in consideration of the mutual covenants contained herein, the receipt and sufficiency of which are hereby acknowledged, the Maker covenants and agrees as follows:

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3. EXHAUSTIVE OPERATIVE CLAUSES & LEGAL TERMS

Section 1: Promise to Pay & Principal Sum

For value received, the Maker unconditionally promises to pay to the order of the Payee the Principal Amount of [Amount in USD] ($[Numerical Amount]), together with interest thereon calculated in accordance with the terms of this Note. All payments under this Note shall be made in lawful money of the United States of America, via the automated credit card charging mechanism authorized herein, or via wire transfer of immediately available funds to an account designated in writing by the Payee.

Section 2: Interest Rate & Amortization Schedule

1. Interest Rate: The outstanding principal balance of this Note shall bear interest at the rate of [Interest Rate, e.g., 8.5]% per annum, calculated on the basis of a 365-day year and the actual number of days elapsed, compounded monthly.
2. Payment Schedule: The Principal Amount and accrued interest shall be paid in installments as follows:
   • Initial installment of $[Installment Amount] due on [First Payment Date].
   • Subsequent installments of $[Installment Amount] due on the [Day of Month, e.g., 1st] day of each successive calendar month until the Principal Amount and all accrued, unpaid interest are paid in full (the "Maturity Date"), which shall be no later than [Maturity Date].

Section 3: Credit Card Authorization & Payment Processing

1. Authorization to Charge: To secure and effectuate the payment obligations under this Note, the Maker hereby irrevocably authorizes the Payee (and its designated third-party payment processors, merchant acquirers, or financial institutions) to initiate recurring charges against the Maker’s credit card account detailed below:
   • Cardholder Name: [Cardholder Full Name]
   • Issuing Bank: [Bank Name, e.g., Chase / Visa]
   • Credit Card Type: [Visa / MasterCard / American Express / Discover]
   • Card Number (Last 4 Digits): [****-****-****-XXXX]
   • Expiration Date: [MM/YY]
   • Billing ZIP Code: [Billing ZIP Code]
2. Recurring Charge Mandate: The Maker expressly authorizes the Payee to charge the credit card account specified above on the due date of each scheduled installment for the exact installment amount. This authorization shall remain in full force and effect until the indebtedness evidenced by this Note is paid in full.
3. Card Updates & Insufficient Funds: The Maker agrees to immediately notify the Payee of any changes to the credit card account (e.g., expiration, replacement, cancellation) and to provide updated valid credit card credentials within forty-eight (48) hours of any such change. In the event a credit card charge is declined or returned for insufficient funds (NSF) or any other reason, the Maker shall remain fully liable for the payment and shall incur a returned payment fee of $[Late Fee Amount] or the maximum amount permitted by applicable law, whichever is less.

Section 4: Prepayment Privileges

The Maker shall have the right to prepay the outstanding principal balance of this Note, in whole or in part, at any time without penalty. Any partial prepayment shall be applied first to accrued and unpaid interest, and then to the reduction of the remaining principal installments in the inverse order of their maturity. Prepayment shall not postpone the due date of any subsequent scheduled installment unless expressly agreed to in writing by the Payee.

Section 5: Default & Acceleration of Maturity

1. Events of Default: The occurrence of any of the following events shall constitute an "Event of Default" under this Note:
   • Failure of the Maker to pay any principal, interest, or fee installment within [Grace Period, e.g., 5] calendar days of its due date;
   • Failure of the credit card charge to successfully process due to Maker action, inaction, cancellation, or expired credentials, failing which is cured within forty-eight (48) hours of notice;
   • Filing of a petition by or against the Maker under any bankruptcy, insolvency, or debtor relief law;
   • Appointment of a receiver, trustee, or custodian for all or a substantial part of the Maker's assets; or
   • Any material breach of any representation, warranty, or covenant made by the Maker in this Agreement.
2. Acceleration: Upon the occurrence of an Event of Default, and at any time thereafter while such default continues, the Payee may, at its sole option and without notice or demand (notice and demand being expressly waived by the Maker), declare the entire unpaid principal balance of this Note, together with all accrued and unpaid interest and fees, to be immediately due and payable.

Section 6: Late Charges & Default Interest

If any payment is not received by the Payee within [Grace Period, e.g., 5] days after its due date, a late charge of [Late Fee Percentage, e.g., 5]% of the overdue installment amount, or $[Flat Late Fee] (whichever is greater), shall be immediately assessed. Furthermore, upon the occurrence of an Event of Default and during the continuation thereof, the outstanding principal balance shall bear default interest at the rate of [Default Interest Rate, e.g., 18]% per annum, or the maximum rate permitted by applicable law, from the date of default until the obligation is paid in full.

Section 7: Scope of Services & Consideration (If Applicable)

To the extent this Note is executed in connection with professional services, goods, or deliverables provided by the Payee to the Maker, the scope of such engagement is defined in the underlying Statement of Work or commercial agreement executed concurrently herewith. The execution of this Note serves as valid, binding consideration for the commercial obligations undertaken by the Payee.

Section 8: Term & Termination

1. Term: This Agreement shall commence on the Effective Date and shall continue in full force and effect until the Principal Amount, all accrued interest, late fees, and collection costs are indefeasibly paid in full.
2. Termination for Cause: The Payee may terminate this Note and accelerate all balances immediately upon an Event of Default as set forth in Section 5. The Maker has no right of unilateral termination prior to the complete satisfaction of the debt.

Section 9: Intellectual Property Ownership & Work Made for Hire

If the underlying transaction involves the creation of intellectual property, software, designs, or creative works by the Payee for the Maker, all such intellectual property shall remain the exclusive property of the Payee until the Principal Amount and all associated fees are paid in full. Upon full payment, the Payee grants the Maker a perpetual, non-exclusive license (or assignment, as specified in the underlying commercial contract) to use the deliverables. Default under this Note automatically suspends all intellectual property licenses granted to the Maker.

Section 10: Mutual Confidentiality & Non-Disclosure

The parties agree that all financial terms, credit card details, account information, and proprietary data exchanged in connection with this Note ("Confidential Information") shall be held in strict confidence. Neither party shall disclose Confidential Information to any third party, except to legal counsel, financial advisors, or as required by applicable law or court order, without the prior written consent of the disclosing party.

Section 11: Representations & Warranties

1. Maker Representations: The Maker represents and warrants that: (a) they have full legal capacity, power, and authority to enter into this Note and incur the obligations set forth herein; (b) the credit card details provided are accurate, active, and legally authorized for use by the Maker; and (c) this Note constitutes a legal, valid, and binding obligation of the Maker, enforceable in accordance with its terms.
2. Payee Representations: The Payee represents and warrants that it is duly organized, validly existing, and in good standing under the laws of its state of organization, and has full authority to collect the indebtedness and execute this Agreement.

Section 12: Limitation of Liability & Indemnification

1. Limitation of Liability: The Payee shall not be liable to the Maker for any indirect, incidental, special, punitive, or consequential damages arising out of payment processing errors, card declines, or administrative actions, except in cases of proven gross negligence or willful misconduct.
2. Indemnification: The Maker agrees to indemnify, defend, and hold harmless the Payee, its officers, directors, employees, agents, and payment processors from and against any and all claims, liabilities, losses, damages, demands, and costs (including reasonable attorneys' fees) arising out of or resulting from: (a) any breach of this Note by the Maker; (b) unauthorized credit card charges initiated by the Maker or fraudulent credit card information provided by the Maker; or (c) any dispute between the Maker and their credit card issuing bank.

Section 13: Dispute Resolution & Arbitration

Any dispute, controversy, or claim arising out of or relating to this Note, including its formation, interpretation, breach, or termination, shall be settled by binding arbitration administered by the American Arbitration Association (AAA) in accordance with its Commercial Arbitration Rules. The place of arbitration shall be [City, State]. The arbitrator shall apply the substantive law of the Governing Jurisdiction. Judgment on the award rendered by the arbitrator may be entered in any court having competent jurisdiction.

Section 14: Governing Law & Jurisdiction

This Note, and all claims or causes of action (whether in contract, tort, or statute) that may be based upon, arise out of, or relate to this Note, shall be governed by, enforced under, and construed in accordance with the internal laws of the State of [State], without regard to its conflict of laws principles. Each party irrevocably and unconditionally submits to the exclusive jurisdiction of the state and federal courts located in [County] County, [State]``.

Section 15: Miscellaneous Provisions

1. Severability: If any provision of this Note is held to be invalid, illegal, or unenforceable by a court or arbitrator of competent jurisdiction, such provision shall be modified to the minimum extent necessary to make it valid and enforceable, and the remaining provisions shall remain in full force and effect.
2. Counterparts & Electronic Signatures: This Note may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Delivery of an executed counterpart of this Note by facsimile, email (PDF), or digital signature platform (e.g., DocuSign, Adobe Sign) shall be effective as delivery of an original executed counterpart.
3. Entire Agreement: This Note, together with any concurrently executed credit card authorization forms or underlying commercial agreements, constitutes the entire agreement between the parties pertaining to the subject matter hereof and supersedes all prior agreements, understandings, negotiations, and discussions, whether oral or written.
4. Waivers: No failure or delay by the Payee in exercising any right, power, or privilege under this Note shall operate as a waiver thereof, nor shall any single or partial exercise preclude any other or further exercise thereof.
5. Costs of Collection: If this Note is placed in the hands of an attorney for collection, or if suit is filed hereon, or if proceedings are bankruptcy or other judicial proceedings, the Maker promises to pay all reasonable costs of collection, including, without limitation, reasonable attorneys' fees and court costs incurred by the Payee.

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4. EXECUTION & FORMAL SIGNATURE BLOCKS

IN WITNESS WHEREOF, the parties hereto have executed this Promissory Note and Credit Card Settlement Agreement as of the Effective Date written above.

FOR [COMPANY FULL LEGAL NAME] (PAYEE):
Signature: _____________________________________
Printed Name: [Authorized Signatory Name]
Title: [Title / Role]
Company: [Company Legal Name]
Date: [Date]

FOR [CLIENT FULL LEGAL NAME] (MAKER / DEBTOR):
Signature: _____________________________________
Printed Name: [Authorized Signatory Name]
Title: [Title / Role]
Date: [Date]

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5. STEP-BY-STEP EXECUTION & FILING GUIDE

1. Document Review & Customization: Open this document in Microsoft Word or Google Docs. Replace all bracketed text fields (e.g., [Client Full Legal Name], [Amount in USD], [State]) with the accurate commercial particulars. Verify that numerical dollar amounts match spelled-out representations.
2. Credit Card Verification: Ensure that Section 3 contains accurate cardholder details and that a separate, compliant PCI-DSS authorization form is completed if required by your merchant processor. Never store unencrypted full 16-digit credit card numbers in plaintext files.
3. Signatory Authority Verification: Verify that the individual signing on behalf of the Maker possesses corporate or personal legal authority to bind said entity or individual to financial debt and recurring credit card debits.
4. Digital Execution: Export the finalized document as a secure PDF and route through an institutional electronic signature platform (such as DocuSign, Adobe Sign, or HelloSign) to maintain a verifiable audit trail (IP tracking, timestamping).
5. Record Retention & Compliance: Store the fully executed PDF and corresponding transaction logs within a secure, encrypted legal repository or contract lifecycle management (CLM) system for a minimum of seven (7) years following full debt satisfaction, or as mandated by state statute of limitations laws.