These aggressive income drivers for the credit card issuers are becoming commonplace, and they can wreak financial havoc on cardholders and families. What's more, consumers have nowhere to turn for help once they've signed cardholder agreements
Los Angeles, CA (PRWEB) November 10, 2006 -–
CreditLearningCenter.com (http://www.CreditLearningCenter.com), a consumer website which helps consumers understand, manage, and protect credit, released a special report today detailing the worst practices of credit card companies. The "Top Ten List of Worst Credit Card Company Practices" highlights the increasingly aggressive marketing and pricing policies that are rampant in the credit card industry. The feature comes as a follow-up to CreditLearningCenter.com's recent report "Credit and Debt in America", the first of a two-part series, with part two to be released later this year.
Credit Card Companies: Enforcing Exorbitant Interest Rates and Hidden Fees
"It's no secret that many credit card companies treat customers shamefully, but the industry continues to stoop lower every year," said Walter Burch, Editor-In-Chief of CreditLearningCenter.com. The report details how credit card companies routinely enforce interest rate-hikes and fees that are buried deep in the fine print of cardholder agreements. "These aggressive income drivers for the credit card issuers are becoming commonplace, and they can wreak financial havoc on cardholders and families. What's more, consumers have nowhere to turn for help once they've signed cardholder agreements," added Burch
Universal Default Blindsides Consumers: Perfect Payment History Won't Prevent Rate Hikes
Indeed, there is nowhere to turn, because most of the leading credit card issuers operate in states with no caps on interest rates, and offer few protections for the consumer. Topping the list of worst credit card company practices was Universal Default a vicious interest rate-hiking apparatus, employed as a risk management, loss-protection vehicle by credit card companies. Under Universal Default, a credit card company can ratchet up a "low interest" card to approximately 30%, even if you have a spotless payment record with them.
Cardholders with Universal Default clauses in their agreements should be on high alert because credit card companies will periodically scan your credit report for one of several Universal Default triggers: Even one late payment on another credit card, your mortgage, or utility; Exceeding your credit limit on any one of your cards; Using in excess of your available credit on any card; Taking on a new mortgage or auto loan; Having too much overall debt; or Simply applying for new credit. Essentially, your credit card company can raise your interest rates due to a perceived change in your overall risk profile. When do most consumers discover Universal Default? "When they get their credit card statement and begin to hyperventilate. By then, it's too late, and the iron door has been slammed shut. Credit cards that contain a Universal Default clause should be avoided period. Those companies who employ it should reexamine its use and consider the devastating impact it can have on their customers," said Burch.
For more information on Universal Default, and the complete list of the "Top Ten List of Worst Credit Card Company Practices", readers may visit http://www.CreditLearningCenter.com. CreditLearningCenter.com helps consumers understand matters related to personal credit, credit scoring, and identity theft. For more information, contact: Emily Cockerill, CLC Press Relations, 818-717-9397