Should the universal default clause on credit card be outlawed ?

Question

I have read if your credit card provider uses the universal default clause in your service agreement they can raise your rates even if you pay a bill late that is unrelated to the credit they are extending to you. This would mean if were late in paying a telephone or power bill late your rates could jump as high as 30%. I can see the increase for people who are frequently late but it seems excessive for those who are not. It also seem pretty close to loan sharking to me.

Answer 1

YES!!!! Absolutely. If you take law in school, one of the basic things they will tell you is that a contract has what is called a four corners rule. This means several things. One is that if its not contained within the four corners of the document, or if any part of the agreement within the four corners of the document are vaugue or give one party an advantage over the other you do NOT have a binding contract. How these SOB's get away with that clause in there and still have a binding contract in the courts is the bigger question. You'll also learn a phrase named Userous. This is where someone is charged such a high rate that its considered userous and abusive. Before the recent bankruptcy laws were changed to favor these credit card banks, the congress should have made the changes you suggest part of the deal. They did not because the big banks paid them off and our congressmen sold us out. Credit card banks use many more deceptive tactics than that. They shorten the payment period so people are forced to be late by accident. All other forms of debt give a full 30 days to pay the monthly installment, credit card banks are as low as 20 days. They use any and every excuse to raise your rates. Too many driving tickets, reports of accidents on your insurance policy, too frequent of use of the card, loss of a job, divorce, and being too close to your cards limit. They use all of those as excuses that your now somehow a greater risk and therefore they up the rates. There are plenty more where that came from. Credit cards are a complete scam, and should be avoided until they clean up their act. Far too many people just accept being abused financially by them, unacceptable.

Answer 2

If you're late paying other bills, you're more likely to be late paying your credit card bills. Your credit card company tries to limit the risk they're taking on by charging you higher interest. The wise thing to do is to pay all bills on-time and in-full if possible. Most people don't have the best of credit and this makes it even worse for them because their interest rates are jacked up. This is why it's so important to pay on time and not wait until the last second to put a check in the mail or to click the "send" button on an online billpay account. If something comes up, such a losing a job, let your creditors know what's going on and work out a plan BEFORE you end up getting behind in your bills.

Answer 3

I have to agree with you. Although on the surface it doesn't appear to be that bad, and could just target repeat offenders, what happens if the mail doesn't deliver a bill? (had it happen) If you simply forget? If you are out of town? (had that happen too) There can be a ton of legitimate reasons to be late with a non-related bill payment. If your phone company is ok with it, why should your credit card companies have the option to dump 30%+ on you?

I for one, think that it seems completely unethical.

Answer 4

I take it with a grain of salt... yes in theory it sounds outrageous, but in reality people should use their credit cards responsibly, and pay their bills on time... people who do that have no problems. This isn't something that is unavoidable. Interest on credit cards is high enough at the usual 20% or so, basically I think people should be worried enough about that and be more careful how much they charge.