Credit Repair Glossary

• Universal Default

  Universal default is a practice that started in the mid-1990’s, when credit card companies started to change the language of their credit card agreements with customers to include “universal default” language.  Almost half of the U.S. banks that issue credit cards have some form of universal default language.

  As an example, if a cardholder has a credit card that normally charges a 9% interest rate on charges, but that cardholder defaults on another loan, the credit card issuer may increase the interest rate to a universal default rate of 24%.  Although many credit card companies have used universal default language in their agreements, many companies have recently stopped the practice.