Universal default is a credit card term referring to your late or missed payment on any bill besides your credit card.
Credit card companies check your credit card report all the time, and if you are late on any payment they find out about it and will consequently jack your credit card interest rates high because they now feel you are a possible problem payer.
Clearly, many people are opposed to universal default but it's legal and the credit card companies have powerful friends making credit card laws, so universal default is here to stay.
The History of Universal Default
Universal default has been around for a while, but nevertheless many people don't know about it.
That means that their credit card interest rates suddenly going through the roof one day can come as a shock.
The reason could easily be that this unsuspecting credit card holder -- who has never missed a payment, or been late on a payment, or incurred any sort of penalty at all with this credit card -- went on vacation and while she was gone forgot to pay her cell phone bill. The cell phone company doesn't charge her anything at all, but does report the missed payment deadline to the credit bureaus.
The credit bureaus log it, and the credit card company sees it -- and uses this as an excuse to raise the woman's credit card interest rates. Cellphones, utility bills, student loans, other credit cards -- it doesn't matter what kind of debt is involved. If there's a late payment on any debt repayment plan, and your credit card company finds out about it, you could see your interest rate shoot up no matter how sterling your record is with the credit card company.
To learn more about universal default and how to avoid universal default, or any other aspect of your credit card, be sure to speak with a representative of your credit card issuer.
