Universal Default Clause in Credit Card Agreements
Credit card companies have been adding universal default clauses to the terms of credit card agreements. This will be very detrimental for consumers who are late on even just one payment with a different credit card or loan. The universal default clause allows credit card companies to pull your credit report on a regular basis. If you have been late on any payments (even to a different company), a higher interest rate can be applied to your credit card. This includes any late payments on your mortgage, car, or utility bill if it is reported on your credit report. This could not only increase the interest rate on future purchases, but also raise the interest rate on the consumer’s entire outstanding balance. For example: if you are late even just once on your car payment, your credit card interest rate could jump from 8% to 29% instantly.
Filed under: Credit Reports