Let's look at a real world example: A woman purchased a new $4,000 large screen TV a few months ago based on the knowledge her monthly payment was going to be $175, and based on the 9% interest rate charged by her credit card company. For five months straight she made all her payments on time, but in the fifth month she was late paying her mortgage bill, for reasons unknown. She found out a month or two later that her credit card company doubled her interest rate to 18%, thus increasing the payment for the TV to about $190 per month. Even though she was never late on any other payments, she found most of her other credit cards raised their interest rates as well. Even her car insurance company raised their rates. The net effect was she ended up paying nearly $200 per month more because she was late on a single mortgage payment.
This is a common result of a very little known or understood clause found in nearly every credit card agreement today. How would you feel if the company who sold you a product, based on certain arrangements (including the interest rate), called you up and said they were increasing your monthly payment for reasons that have absolutely nothing to do with them? Is this really fair?
Let's take this a step further. Could any customer call a company, that had sold them a particular product on payments, and tell them the re-payment to the company will now be lower because they had missed a payment to one of their suppliers? Of course not. This Universal Clause is extremely one- sided, making consumers victims of what one could easily ascertain as an unjust and unmerited practice.
Yet many powerful credit card companies continue to lobby Washington, arguing it is the consumer that needs to be held accountable to the terms and conditions of the contract, neglecting the most important element, that they are equally accountable to the same terms and conditions of the agreement. The Clause was introduced in the mid nineteen- nineties, after seeing an influx of bankruptcy filings in America. The credit card industry, fearing huge losses, decided to enact this little known clause referred to as "The Universal Default Clause". Simply stated, they feel the credit card companies should have the right to increase one's APR if a consumer is late on any other credit card or debt entity, including outside bills such as phone, cable or utilities. This clause is purely an excuse to collect more money for credit card companies who invoke the clause. Surprisingly enough it comes at a time when many cardholders need monthly relief, not additional financial strain. This clause creates a natural conflict between cardholders and credit card companies, and generates an adversarial relationship that leaves everyone bitter.
According to the Office of the Comptroller of the Currency (OCC) this is considered an unfair practice and has recently labeled it "Unacceptable". The Clause is usually hidden under the "Other APR's" section.
Our Advice: Please read each credit application carefully and avoid any card with this clause. Currently out of 45 banks issuing 144 cards, 44% use the Universal Default Clause.
Phil Andrews is currently the VP of Business Development for Precept Financial Solutions, a leading debt settlement firm based in Dallas, Texas. For more information, go to http://www.PreceptFinancial.com or call toll free 800-584-0855 and press option 2.
limousine chicago serviceTo be out of credit card debt is your dream... Read More
How do I lower my debts?There are several ways of... Read More
Is there a way to get out of debt without... Read More
It's never pleasant to realize that you're in financial hot... Read More
It is always possible to negotiate with creditors ? even... Read More
The first and maybe most important step in a debt... Read More
You may not realize what that credit card bill is... Read More
Filing bankruptcy is not fun! It is a last resort... Read More
You go to the mail box and scan - a... Read More
Getting Behind Getting behind on your debts owed can be... Read More
This May, the Department of Trade and Industry in the... Read More
There are many debt relief programs out there both off... Read More
On April 20, 2005, President Bush signed into law the... Read More
The business of banking has changed dramatically over the last... Read More
Decreasing your debt is paramount to having a good credit... Read More
An IVA (individual voluntary arrangement) is an alternative to bankruptcy... Read More
Vehicle repossession may appear justified in circumstances where a person... Read More
Many people have been taught that you cannot get ahead... Read More
Are you still clearing a mountain of debt amassed last... Read More
"Legally terminate credit card debt! You can be debt-free in... Read More
Bankruptcy laws give debtors a way to resolve debt by... Read More
Wholeness requires separation. In order for you to experience yourself... Read More
WILL MY CREDITORS STOP HARASSING ME?Yes, they will! By law,... Read More
As a single mother, lets admit it, times get tough.... Read More
There are some new bankruptcy laws going into effect before... Read More
outdoor induction lights led street lighting retrofit Pete's produce ..Have you ever felt trapped in a Rat Race and... Read More
Yes, debt collection tips can help. You may think you... Read More
Should you be unfortunate enough to face a CCJ ?... Read More
There are some new bankruptcy laws going into effect before... Read More
If you once have been caught in the debt trap,... Read More
For most Americans, credit card debt is a dangerous and... Read More
In March 2005, the U.S. financial services industry succeeded in... Read More
You go to the mail box and scan - a... Read More
Financing a college education is one of the more expensive... Read More
Leaving school, getting a new job, or even a raise... Read More
Credit counseling is a viable option for those who are... Read More
What is debt settlement?Debt Settlement is a process to settle... Read More
After October 17, 2005, a lot of people are going... Read More
Educating yourself about the ins and outs of debt negotiation... Read More
While driving around your community, you may have seen signs... Read More
There is current concern from the Bank of England that... Read More
WILL MY CREDITORS STOP HARASSING ME?Yes, they will! By law,... Read More
Having something tangible to strive towards can work wonders for... Read More
Want to know if your attitude towards your finances is... Read More
Troubles with Global Economy; Do you see future problems with... Read More
With mounting bills and unforeseen hardships, you may be considering... Read More
There is a law all smart people break.Parkinson's law.Parkinson's law... Read More
Honorably and ethically rid yourself of burdensome debts using the... Read More
Bankruptcy is one of the tougher choices we as adults... Read More
Debt negotiation and settlement can give you a drastic reduction... Read More
Debt Relief Debt Relief |