Universal Default And What It Means To Consumers

Universal Default And What it Means To Consumers
The majority of credit card users have learned that it can take a number of years to pay off credit card debt.  The problem is that credit cards are easy to obtain and debt builds quickly.  High interest rates and high credit limits have contributed to the highest number of credit card defaults in history.

Credit card offers promising low interest rates and rewards have increased the number of credit cards users by millions.  What consumers often do not realize is that if you make late payments on any of your credit cards, not only can you stand to lose your low introductory rate, but also once the late payment is reported to the major credit bureaus, the rates on all your credit cards may go up.  Known as universal default, nearly forty five percent of all banks have enacted a policy stating that if a consumer makes late payments on any credit account, the interest rate currently being charged to that consumer will rise.
Bounced checks, exceeding your credit limit, acquiring a new credit card, and simply having a large amount of outstanding debt are included in the universal default policies.  Universal default can cause your interest rates to rise dramatically regarding all your credit accounts, not just the one in which late payments have been made.  Credit card users should use extreme caution in opening new accounts or accumulating large amounts of debt.  Universal default policies can end up costing you hundreds or even thousands of dollars in additional interest and fees.