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universal default

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Definition: Universal default happens when a lender enforces default terms (usually imposed on borrowers who have missed payments or exceed balances) on a borrower that has defaulted with another lender. For example, your American Express interest rate increases because you were late on a payment on your Citibank VISA. Universal default allowed credit card issuers to increase interest rates "at anytime, for any reason."

New credit legislation which went into effect February 22, 2010 prevents credit card issuers from implementing universal default by limiting their ability to raise interest rates on pre-existing balances. Read the Credit CARD Act of 2009 for more details.

 

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