They can use your late payment with other credit card or utility companies
as a justification to raise your interest rates as high as 30%. Some banks
even go as high as 35%. Because you have paid one bill late, even
something like a telephone bill, your other creditors may now see you as a
risk. Higher risks equate to higher interest rates.
Banks and credit card companies who practice universal default generally
monitor a consumer’s credit reports on a monthly, quarterly, or yearly basis.
The following are some reasons the universal default clause is activated:
First, take a look at your credit card statements and check to see if your
interest rates have changed. Second, order your credit reports. You will
want to pay attention to the following sections on each of your credit reports:
(1) Experian—“Inquiries Shared Only With You.”
(2) Equifax—“Inquiries that Do Not Display to Companies.”
(3) TransUnion—“Account Review Inquiries.”
More than likely, if you see your credit card company listed in these
sections, you are being monitored. Make sure you thoroughly check your
reports for, errors, mistakes and any incorrect information. Any
inaccuracies should be disputed as this information may be the reason
universal default occurred. Unfortunately, at this time, there is not much you
can do if you have been affected by a universal default clause. Calling your
creditors and attempting to negotiate lower interest rates is one option.
Consumers who are already over burdened with debt certainly do not need
another heap of debt unfairly forced upon them. Universal default punishes
consumers and has the potential to ruin credit history and credit scores.
There is help on the horizon.
Lawmakers are responding to consumer groups who oppose such
practices. In June of 2006, New York became the first state to outlaw the
practice of universal default. This issue has also gained attention on the
federal level. Recently, Democratic Rep. Keith Ellison of Minnesota
introduced a bill to the House which seeks to protect consumers from
universal default clauses.
Rep. Ellison’s Universal Default Reform Act of 2007 would prohibit credit
card companies from raising interest rates on consumers based upon
payment histories with other credit card companies, utility companies and
other lenders. Rep. Ellison has a series of legislative proposals he plans to
introduce as part of his consumer justice agenda. His Reform Act has the
backing of many consumer groups.
In the meantime, monitor your credit card statements, make it a practice to
read the fine print on all credit card applications and most of all, stay
informed.
as a justification to raise your interest rates as high as 30%. Some banks
even go as high as 35%. Because you have paid one bill late, even
something like a telephone bill, your other creditors may now see you as a
risk. Higher risks equate to higher interest rates.
Banks and credit card companies who practice universal default generally
monitor a consumer’s credit reports on a monthly, quarterly, or yearly basis.
The following are some reasons the universal default clause is activated:
- Late payment on a credit card, mortgage, auto loan or utility bill.
- Exceeding the credit limit on any credit card.
- Using 50% or more of your available credit limit on any of your credit
cards.
- Having too many credit inquiries.
- Carrying too much overall debt.
- Getting a new mortgage, auto or personal loan.
First, take a look at your credit card statements and check to see if your
interest rates have changed. Second, order your credit reports. You will
want to pay attention to the following sections on each of your credit reports:
(1) Experian—“Inquiries Shared Only With You.”
(2) Equifax—“Inquiries that Do Not Display to Companies.”
(3) TransUnion—“Account Review Inquiries.”
More than likely, if you see your credit card company listed in these
sections, you are being monitored. Make sure you thoroughly check your
reports for, errors, mistakes and any incorrect information. Any
inaccuracies should be disputed as this information may be the reason
universal default occurred. Unfortunately, at this time, there is not much you
can do if you have been affected by a universal default clause. Calling your
creditors and attempting to negotiate lower interest rates is one option.
Consumers who are already over burdened with debt certainly do not need
another heap of debt unfairly forced upon them. Universal default punishes
consumers and has the potential to ruin credit history and credit scores.
There is help on the horizon.
Lawmakers are responding to consumer groups who oppose such
practices. In June of 2006, New York became the first state to outlaw the
practice of universal default. This issue has also gained attention on the
federal level. Recently, Democratic Rep. Keith Ellison of Minnesota
introduced a bill to the House which seeks to protect consumers from
universal default clauses.
Rep. Ellison’s Universal Default Reform Act of 2007 would prohibit credit
card companies from raising interest rates on consumers based upon
payment histories with other credit card companies, utility companies and
other lenders. Rep. Ellison has a series of legislative proposals he plans to
introduce as part of his consumer justice agenda. His Reform Act has the
backing of many consumer groups.
In the meantime, monitor your credit card statements, make it a practice to
read the fine print on all credit card applications and most of all, stay
informed.
The Universal Default Clause Can Raise
Your Credit Card Interest Rates
by Lisa Phillips
May 2007
Your Credit Card Interest Rates
by Lisa Phillips
May 2007
| Copyright RebuildCreditScores 2010 All Rights Reserved |
Links
Have you ever been in a situation where you were able to pay most of your
bills but perhaps you let the least essential debt go for a month? Well this
can hurt not only your credit rating but also affect your interest rates and
credit limits with all of your creditors.
This is the practice of Universal Default. It is a relatively new clause added
to the terms and conditions of banks and credit card companies.
Now banks and credit card companies have yet another excuse to charge
you more money and potentially wreak havoc on your credit scores. All
without your knowledge.
bills but perhaps you let the least essential debt go for a month? Well this
can hurt not only your credit rating but also affect your interest rates and
credit limits with all of your creditors.
This is the practice of Universal Default. It is a relatively new clause added
to the terms and conditions of banks and credit card companies.
Now banks and credit card companies have yet another excuse to charge
you more money and potentially wreak havoc on your credit scores. All
without your knowledge.
Universal Default involves banks and
credit card companies monitoring
your payment histories with other
creditors, even your utility bills.
Essentially this means that if you are
late paying a bill with one company,
your other creditors, which you are
paying on time, can raise your
interest rates.
credit card companies monitoring
your payment histories with other
creditors, even your utility bills.
Essentially this means that if you are
late paying a bill with one company,
your other creditors, which you are
paying on time, can raise your
interest rates.
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