Friday, February 8

Goodbye Universal Default

Credit card companies are beginning to announce that they will no longer jack your interest rate if your credit score goes down. This practice of increasing your interest rate if you have a decline in your credit score is covered under what the credit card companies call the 'universal default clause'. Many people have had their credit card rate increased under this clause even when their repayment history was perfect with the credit card company that was increasing the interest rate. Here is a great write up which answers the question What is a Universal Default Clause

CHASE announced in November that they're discontinuing the practice, and Citibank made the same announcement earlier in 2007.

This is great news for people with credit cards. Fees will be less! Although this isn't necessarily 'new' news, it appears that it will get more attention in 2008 with the subprime crisis receiving even more attention from our government. Now, I'm no fan of regulations, but maybe the oppressive credit card fee structures will finally get some federal oversite!

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