Are credit cards allowed to increase your APR if you pay ON TIME with them but LATE to other cards?

Question

I heard that most credit card companies increase your APR even if you pay on time! What they do is they check your car payments and other cards, and if they see that you are late with OTHER cards, they still increase their APR. What gives???

I heard it's called the Universal Clause??? i'm not sure

this is where I got the info:

http://finance.yahoo.com/expert/article/millionaire/26303

Answer 1

Yes they are allowed to do this. The reason is simple. Creditors assign interest rates based on risk. If you are a low risk, you have low rates. Making late payments on other cards and loans shows creditors that you are more of a risk than originally thought. The adjust rates accordingly to account for this.

Answer 2

While the article isn't untrue, the ACTUAL incidents are far less than he implies.

Yes they CAN do that and YES it is called universal default clause but in practice it takes more than just one incident and several card companies are going away from it (Citibank for one) and the FTC is considering banning it altogether

The logic behind universal default is if you are late on payments to other creditors then you are more likely to be a higher risk for them. Which makes sense, however if you are only late on one and just in one month then good chance it was just a brain cramp and overlooked by accident.

So your first statement is incorrect MOST card companies do not increase your APR even if you are on time.

Answer 3

Yes, that is typically called the "universal default" clause. About half of credit card issuers have that in their terms, but not all. It is attracting a lot of bad publicity recently and with Congress sniffing around the credit card business, some credit card issuers have decided to stop doing it. Washington Mutual has just announced they will no longer have a universal default clause, and Citibank removed theirs in March.

Regarding whether it is allowed, the answer is yes. As long as they disclose it in the Terms and Conditions, they are allowed.

Answer 4

Yes. They do it because they can. Is it fair? No. However, things can possibly change.
Did you know that the banks provide 98% of their regulators' funding? The same regulators who are supposed to protect the banks AND the consumers dismissed just about every case filed by consumer advocates?
There is a reason why most credit card companies are headquartered in specific states? States, such as Utah & Kentucky, have lenient usury limits, or "floating rates".
Read some of the sources below to find out exactly why and how banks can profit the way they do.

Answer 5

yes they are . beucase the way that cards companies work is basically risk based . So if you are late on your other cards and current on some they might increase the rate. Most of the time these companies are internally linked . I work for a bank and did work for their cards division first . They review your credit report and that's how they decide. try to make atleast min payments on time with everyone and that would take care of it. Best way to have automatic payment set up with those cards so you never have to remember to make payment and remember due dates.

Answer 6

oh this is the biggest one that urks me. I had a credit
card with 9% interest and out of no where they put it
23% (not basing it on the credit I established with them)
but based on my credit report. I had the card for 7 years
and was never late !!!!! Needless to say I cancelled
the card, so yes they can do that at any time to anyone
for any reason. Nice !!!!

Answer 7

It's the universal default clause. Check out the website below.

Answer 8

yes they are allowed to do this. If you read your pamplet that you get when you receive your card it states that they have the right to change the apr whenever. with or with out notice.

Answer 9

Yes ..have you ever noticed the credit card company pulling your credit report everymonth??? Two of mine do they are checking my credit every month...pull your file and look at you inquires

Answer 10

the only thank you to steer away from the upward push is to close the account in the specified time(decide out). I accept as true with the 1st submit even with the undeniable fact that. in case you do no longer carry a stability does it relatively count huge type?