Credit Cards: What is the Universal Default Clause?

Most people who carry major credit cards are well aware that the interest rates associated with them tend to be higher than for other types of lending, such as home or auto loans. Anyone who has paid their credit card bill late more than once or twice is also aware that doing so may cause the interest rate on their card to go up ? sometimes by quite a lot. Many credit cards carry interest rates of as much as 20% or 25% annually, and customers who want to avoid interest rates in that range make an effort to pay their bills on time.

What many people do not realize, however, is that up to one third of all credit card issuers now include what is known as a "universal default clause" in their bills. This information, usually disclosed in the tiny print on the bill that few people bother to read, indicates that the interest rate on your credit card may be increased if you pay bills late to other lenders, even if you pay your credit card bill on time.

This means that paying any bill late that could show up on your credit report, such as an auto payment or a utility bill could cause your credit card interest rate to go up. This, in turn, could hurt your credit score. There is currently nothing in Federal law that prohibits this practice; the law only requires that lenders disclose it in writing. Credit card companies justify this by saying that customers that make late payments to anyone increase the risk for all lenders. Nevertheless, many, if not most, credit card customers are unaware that such policies exist.

Not all credit card companies have such a policy; in fact, most do not. Customers who are not interested in having the interest rates of their credit card tied to their ability to pay their phone bill on time would be advised to read the fine print in their credit card statement. If such a policy exists, you could either complain to your credit card issuer about it or shop around for another credit card. The lesson to be learned here is a valuable one ? when you receive your credit card bill or a notification that your credit card billing terms have changed, take a moment to read the fine print.

©Copyright 2005 by Retro Marketing. Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including End-Your-Debt.com, a site devoted to debt consolidation and credit counseling, and HomeEquityHelp.net, a site devoted to information regarding home equity loans.

---

Credit Card Traps: How To Spot Them On The Spot!

They arrive in your mail - a conspicuous looking mail... Read More

5 Surefire Ways To Eliminate Credit Card Debt

Do you have enormous credit card debt? You are certainly... Read More

Discover the Parts of a Credit Report and What They Mean

So you ordered a copy of your credit report to... Read More

SuperCharged Secret 5, Credit Card Utopia

LIVING IN CREDIT CARD UTOPIALet's just take a brief moment... Read More

4 Steps to Creating Good Credit

As a consumer you've learned the importance of establishing a... Read More

Reward Credit Cards: Get the Best Rewards Card Incentive Program

A good credit reward card can contribute to your retirement... Read More

The Exact Action To Take When You Find Errors In Your Credit Report

There are times when you may be turned down for... Read More

Opting For A Credit Card? Check Out Certain Terms

You've just received a "pre-approved" credit card offer in your... Read More

A Summary of the Fair Credit Reporting Act

This summary of the Fair Credit Reporting Act will explain... Read More

Credit Card Incentives

Credit card companies want your business. After all, lending money... Read More

Credit Cards or Store Cards - Which Is Better?

Introduction In this article, a presentation is made of the... Read More

Why Does Your Credit Card Rate Keep Going Up?

Have your read your credit card contract through completely? Do... Read More

Common Credit Score Myths

A lot of credit score myths about fico score ratings... Read More

Is Your Credit Score Costing You Money?

Most of us want a good credit report to obtain... Read More

Credit Counseling: Is it Really Necessary?

Not everyone has a positive experience with credit counseling. Potential... Read More

Credit Cards - The Basics

How Lenders Operate ? And How They'll Make a Tidy... Read More

Do you Know the Benefits of Checking your Credit Report?

Do you know why you should check your credit report?Of... Read More

Rewards Cards - Are They Right For You?

Rewards cards have become the latest rage in the credit... Read More

UPS Delivers the Goods, Your Identity

Well now we add CitiGroup and UPS to the Identity... Read More

What Can Happen to You as a Victim of Identity Theft, Facts & Figure

Is identity theft really that serious? Thousands of people every... Read More

Identity Theft ? Additional Protection for Soldiers on Active Duty

Congress passed the Fair Credit Reporting Act several years ago... Read More

Shoppers Beware - Tis The Season

It's the number one complaint from consumers and it only... Read More

Credit Card Debt: One Way To Avoid It

One of the biggest problems people have in these modern... Read More

Big Brother Knows Whats in Your Credit Report - How About You?

Whether you are aware of it or not, credit bureaus... Read More

Annual Credit Report and Free Annual Credit Report

Getting an annual credit report review has been the advice... Read More

Understanding the Function of Credit

What is Credit?Credit is the backbone and the engine behind... Read More

Low Interest Credit Cards: A Thing of the Past?

With interest rates rising, low or zero percent credit cards... Read More

SuperCharged Secret 4, Credit Card Utopia

YOU SCRATCH MY BACK, AND I'LL BUY SOME MORE BEER!Let's... Read More

Credit Help for Real Estate Financing: Credit Scores

When you buy real estate, lenders run all of the... Read More

Your Credit Rating and How To Check It

There is a lot of confusion surrounding UK credit ratings,... Read More

Credit Reporting: How Does It Work?

In order to determine a consumer's credit worthiness, creditors and... Read More

How Can A Qualified Mortgage Consultant Help Boost Your Credit Scores?

Consumers interested in purchasing or refinancing a home will pay... Read More

A No-Brainer Way Of Getting Credit And Credit Cards

What Is Your Credit Rating Now?If you have any charge... Read More