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Beware of The Universal Default Clause

Mortgage and Lending with Allied Mortgage


Consumers, myself included - need to be more wary than ever of the unscrupulous methods that Credit Card companies are using to separate more of your hard earned money from you.


It's important to read the fine print on your credit card agreement


The Universal Default Clause means that even if you pay your credit card bill timely without ever having the slightest problem, the credit card company can increase your rate if for example you paid your phone bill late.


The internet is rife with stories from people all over the US that have had the awful experience of having their rates go as high as 29%.

In many cases the jump in rate was not even attributed to a late payment in another area of credit, just making an additional purchase or opening of another tradeline or account has caused many to have their cards interest rate increased. 


Banks are consistently monitoring credit info and increasing rates even where it seems unjustified.I read about one case in particular whereby the consumer obtained a low rate card at 4.5% with a 15k line of credit. When the consumer used 9k to have home improvement work done to install a ramp for a disabled parent the creditor slashed the available balance and increased the rate to 24%  and the consumer started to recieve harassing phone calls even though she never paid any bills late, even when she paid the bill down to half the calls continued.


Late Fee's

In 1996, the U.S. Supreme Court in Smiley vs. Citibank lifted the existing restrictions on late penalty fees. Back then, fees ran to $5 or $10, and usually did not exceed $15. After the Court's decision, fees soared, reaching upwards of $30. Since then, the amount of revenue the companies generate from fees (including late charges, over-the-limit fees, and charges for returned checks) has doubled.



Check the fine print, there is pending legislation to try a put a halt to most of these practices hopefully some of it will be successful in stopping these practice.