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Stay Apart from Credit Card Deals with "Universal Default"!

2007-10-05

Believe it or not, the credit card industry happens to be the most profitable, at least in the United States. The annual profits of credit card companies amount to astronomical sums. On the first sight, credit card deals appear to be a real bargain, but if you don't know the rules of credit card games, you may fall into credit card traps. There are many of them and to make it worse, they are legal. Most of cardholders are not aware of hidden credit pitfalls. You can easily fall from grace of credit card companies and face the horrible universal default. What is it? And how will it influence your future credit card deals?

Sometimes we blindly follow credit card rules rather than analyze them. Choosing the best credit card deal, we pay more attention to benefits and cannot see probable losses hidden in the lines of the fine print. Even if you dare to read it, most obviously it won't make any sense for you.

If you haven't heard anything about a notorious universal default clause, lucky you are. This way you haven't experienced all the troubles of this financial burden. Picture that! All of a sudden your enjoyable low interest rates were doubled or even tripled. Your disappointment has no limits and credit issuers rub their hands with pleasure. Small wonder, you are a good cash cow for them now.

One late payment on your mortgage, a car loan, not to speak about your credit card, is enough to raise your interest rates up to 30 percent, if your credit card agreement contains this universal default clause. Say good bye to low interest rates, good things don't last forever.

You will be baffled with this sudden change and unfortunately, you are helpless to do anything about it. What is done cannot be undone! Still, you can protect yourself from this disaster. How can you do that?

First of all, try to stay away from credit card deals that imply a universal default clause. Next time you want to open a new credit card account, make sure to apply for a card without this clause. Read the fine print carefully. In case you don't understand a word (it is quite possible), call the credit card company and clear this question up.

If you have several plastics and don't know for sure whether they have this clause or not, check your credit card agreements and find it out. In case you find the one with a universal default clause, think about transferring the balance from that card. You may use your best balance transfer card for this purpose. Again, be very careful! Your hasty decision to cancel the card may have a negative impact on your credit score.

Examine your credit card bills and try to pay them off in due time. By the way, don't forget to monitor your credit report. This service is also available. The information in your credit report should be correct. If you find some mistakes, act immediately. Don't neglect the points that play the leading role in your financial well-being.

The point is that some credit card companies review your credit reports on a regular basis in order to find something that enable them to increase your interest rates. Meanwhile, other companies never use such methods. Still, it won't do you harm to keep this situation under control and be sure that you are protected from such credit disasters in future.

I wish I've read this article before I got my credit card. Having known these tips I wouldn't have made so many mistakes....

All good information! I think everyone should carefully read the article and keep in mind all these tips to avoid credit cards traps.