Credit Card Universal Default

Unlike a car or home purchase, an asset does not secure a credit card purchase. The pay off period for credit card is not set like a mortgage or car loan.

When you use your credit card you have a choice to pay off the full balance at no interest, or use the line of credit and spread your payments out with interest. Interestingly enough, the credit card issuer never asks you what it is you need the money for. This lack of discipline on the issuer’s part has provided the consumer with an unbridled spending behavior.

Long has the credit card companies taken the stance that consumers know the do’s and don’ts when it comes to credit card spending. Then why has our government passed laws after laws since the 1970’s on credit card disclosure? Supposedly your balance, minimum payment, interest rate, etc. are spelled out in the fine print, but where is “universal default” spelled out.

Universal default gives the issuer the opportunity to raise your interest rate, assess higher fees, and/or lower your credit line based on your history with other lenders no matter if you have shown timely payment with them or been a longstanding client. Most consumers are unaware of this practice.

This is a transparent charge that eliminates the ability of the consumer to take personal responsibility for their actions. Be careful when using your credit cards, and read every line of your monthly account statement.