Is the Controversial Credit Card Universal Default Clause Finally on the Way Out?
USA Today reported the other day that credit card issuers seem to be moving away from the practice of “universal default” — where one late payment on a credit card or bill can raise the interest rate on a person’s other credit cards — as well as the cost of future mortgages, car loans, and insurance policies. (That’s in addition to any fees that might have to be paid on the original late payment.) The article sites four major lenders who are either not using universal default or are changing how they do use it: Citibank, Chase, Discover, and American Express. While the end of universal default would be very welcome news to cardholders and consumer advocates everywhere, unfortunately, that may not be what’s going on.
