In the past, if you had a dispute with your credit card company, you basically had one choice to settle the matter: arbitration.

That's because most credit card companies include a provision in their contracts requiring customers to go into arbitration instead of going to court.

They say arbitration is faster and cheaper.

It's also a losing proposition for customers. The card companies hired arbitration firms that almost always ruled in their favor.

A Public Citizen analysis of 19,000 cases found that arbitrators hired by MasterCard, Visa, Discover and American Express took the companies' side in 18,000 cases.

Some of those cases involved consumers who didn't actually owe money but were identity theft victims who felt they had to accept arbitration or risk not being able to get credit in the future.

All of the cases were from California because it's the only state that requires public access to the results of such disputes.

But the entire system of forced arbitration may be about to change -- or even go away.

Earlier this year, Minnesota Attorney General Lori Swanson filed suit against a major arbitration firm, the National Arbitration Forum, alleging that it had deceived credit card customers.

In July, NAF and another large arbitration organization, the American Arbitration Association, said they would stop accepting credit card arbitration cases.

Their withdrawal is forcing credit card companies to decide whether they can keep forcing customers into arbitration.

JPMorgan Chase has already said it won't file any new consumer credit card arbitration claims. Chase, the nation's second-largest credit card issuer, is considering whether to keep including the arbitration provisions in its customer contracts.

Bank of America also announced that it will stop requiring arbitration. The bank said it hopes to work out most disputes directly with customers.

The credit card industry is facing major changes early next year, thanks to the Credit Card Accountability Responsibility and Disclosure Act.

The new regulations will change the way credit providers do business, requiring them to give a 45-day notification before increasing a customer's rate and making it more difficult for them to raise rates on existing balances.

However, when details for the bill were finalized, some industry analysts felt one major thing was missing -- an end to forced arbitration.

The arbitration system isn't going to go away overnight. Credit providers may still be able to push customers into arbitration using other organizations.

However, with two major arbitration players refusing to take on new cases and the potential of further lawsuits involving arbitration like the one filed against NAF, some credit companies may be less likely to do so.

Eventually, consumers should be able to take credit card companies to court -- which in many cases, wasn't even an option before, says Ed Mierzwinski, consumer program director of the U.S. Public Interest Research Group.

Taking your credit provider to court wouldn't be free. You'd still have to pay attorney and court fees.

But being able to go to court -- instead of just being forced into arbitration -- would give consumers much more bargaining power than they have now.

To avoid the bad publicity and expense of going to court, credit providers would likely be even more eager to resolve disputes quickly and quietly.

"Credit card companies should be more likely to work things out with consumers because they will not want to go to court for a few hundred dollars," Mierzwinski says.

Indeed, with the recession eating away at profits, we've seen some evidence that credit card providers are more willing to settle debts outside arbitration.

By Erin Brereton

Interest.com Contributing Editor