Subscribe to RSSExtra Credit: What's universal default?
Do you know what universal default means? It is the practice of a credit card company raising your interest rates based on your failure to pay one of your other creditors. Example: you are late on making your car loan payment, and the following month the interest rate on your credit card goes up"¦ substantially.
A recent Consumer Affairs article does a good job of outlining the specific credit card industry practices that are enraging consumers and (once again) attracting the attention of politicians, including universal default, trailing interest, and penalty fees.
Compete recently surveyed consumers (March 2007, n=300) about their use of credit cards and their understanding of some of these less-than-desirable tactics that drive industry profit.
Many of the responses categorized as very negative tended to use expletives, but here are a few examples fit for blog consumption:
- Absolutely not right. Your credit with one lender should have no affect on your credit with the other. That’s like penalizing an employee for being late or missing work at their OTHER job!
- "¦it’s like dealing with the mafia or loan sharks.
- COMPLETELY UNFAIR AND PRICE GOUGING!
- Does the word “PARASITES” answer your question?
Don’t like it either and want to complain? Good luck figuring out who to complain to besides your card company. Depending on what type of institution issued your card, you may need to talk to either the Federal Reserve Board, Office of the Comptroller of the Currency (OCC), Federal Deposit Insurance Corporation (FDIC), Office of Thrift Supervision, National Credit Union Administration, or the Federal Trade Commission (FTC). No wonder the credit cards companies seem to have the upper hand in this battle"¦.so far.
