Universal what?!
Well, I am still procrastinating on calling my credit card companies and negotiating a better deal. I did, however, check into why exactly my credit card interest rates have skyrocketed when I have paid the bills on time.
Two little dirty words: Universal default.
This enlightenment is courtesy of a very well-written article, “What credit card companies don’t want you to know,” by David Bach of Yahoo! Finance.
Bach outlines that it is completely legal for credit card companies to hike your interest rate to as much as 30 percent if you are late on paying other bills such as car loan, mortgage or utilities service! I had heard rumblings of this concept in the past, but thought it might be lore spread about by credit card haters.
Well it’s true, and guess what! I forgot to pay the electric bill one month. Yes, that’s what they all say, but I truly did forget. So that cost has been tripled many times over with skyrocketing interest rates caused by one, seemingly irrelevant error.
Most statistics report that between 40 and 45 percent of credit card companies have a universal default policy. Citigroup Inc., the third largest credit card issuer in America, recently abolished the practice, according to Reuters News Service. Good to know.
What have we learned today?
1) Check the terms and conditions for a universal default policy. Avoid those offers at all costs.
2) The consumer is in control. Those who have high credit card interest for no apparent reason should call the credit card company and threaten to go with a Citigroup balance transfer offer if they don’t drastically decrease your interest rate immediately.
