Watch Out for the Credit Card Default Clause and Universal Default Clause
If you do not have the first clue as to what default and universal default clauses are, then you are one of those credit card users that most credit card companies come to love. First of all, you should know which one of these two practices your personal credit card uses. If you want to find out, try reading the small print that came with your credit card. If you already tossed that information away, call your credit card company's customer service department and ask.
A universal default clause carries with it the right of the credit card company to increase your interest rate in the event that you make a payment late. So, you are thinking, "No big deal. I did know that." But did you know that the universal default clause also applies to a late payment on any one of your billing accounts whether it be a utility bill, mortgage payment, store credit account, credit card account, car installment loans, or some other type of billing payment?
The default clause that most of the credit card companies employ simply involves the one specific credit card account that it is attached to. The credit card company only has the right to increase your interest rate in the event that you make a payment late on that account.
Therefore, every consumer should read the small print on each account that they acquire to determine which type of default clause is on it. In any event, they should avoid the universal default clause and close out any accounts that utilize it, replacing them instead with accounts that utilize the simple default clause.
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