Written by Craig D. Robins, Esq.

“Universal Default” is when you are late with one credit card and because of this, another credit card that you are current with considers you to be in default on their card, and then doubles your interest rate.

The dreaded universal default language is buried deep in the complicated and small-print boiler-plate language in your credit card agreement. Very few consumers know that their card may have this provision affecting them – that is, until it is too late.

Thus, even if you are current on thousands of dollars owed on many cards, if you are late with just one – for just a few dollars – your interest rates can double on all of your cards, to as high as 30%.

Credit card companies have been doing this for several years because of greed and because they have been able to get away with it. Many analysts believe that universal default has been one of the biggest profit centers for most credit card companies during recent years.

The great increase in interest rates triggered by a universal default has resulted in many Long Island consumers seeking bankruptcy protection to eliminate their debts as the only possible debt solution.

Fortunately, sweeping new legislation was adopted in December 2008 to prohibit this unfair and deceptive practice. However, the new laws do not become effective until July 2010. They will prevent credit card companies from raising interest rates on existing balances.

The excessive charges caused by universal default leads effects many consumers on Long Island.  However, consumers can often eliminate their credit cards debts by filing for bankruptcy relief.

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