topic Re: Is universal default still around in Credit Cards

Is universal default still around

mrldp40 — Tue, 11 Aug 2015 23:15:16 GMT

Like say cap1 secured closing your account because u default on another credit card .that's how it was before 2007

Re: Is universal default still around

Anonymous — Tue, 11 Aug 2015 23:23:27 GMT

@mrldp40 wrote:
Like say cap1 secured closing your account because u default on another credit card .that's how it was before 2007

As far as I know, no. But they can and do monitor your reports for negative trends and will adjust or close your accounts if they forsee a risk of default.

Re: Is universal default still around

Pway — Tue, 11 Aug 2015 23:25:19 GMT

Re: Is universal default still around

UncleB — Wed, 12 Aug 2015 08:36:17 GMT

My understanding is that Universal Default is no longer around in the sense that they can arbitrarily (and permanently) raise your APR to 29.99% (or higher) only because you have problems with another lender, but they can (and do) still CLD, and in extreme cases simply close the account.

"Back in the day" having all your 10% and 12% accounts permanently changed to 29.9% because an account you cosigned for got in trouble was the beginning of the end for many folks. For many people, it was literally impossible to recover once the 'Universal Defaults' started, and generally once there was one, the others would follow. A person could be financially stretched, but 'OK', then overnight the monthly interest charge was suddenly more than even the minimum payment (I had one card where this was the case). It was a nightmare for many people, and it was fundamentally unfair - you weren't even able to close the account yourself with the old APR. At least now when they close the account, you get to keep the old terms.

Re: Is universal default still around

Anonymous — Wed, 12 Aug 2015 23:25:04 GMT

@UncleB wrote:
My understanding is that Universal Default is no longer around in the sense that they can arbitrarily (and permanently) raise your APR to 29.99% (or higher) only because you have problems with another lender, but they can (and do) still CLD, and in extreme cases simply close the account.

"Back in the day" having all your 10% and 12% accounts permanently changed to 29.9% because an account you cosigned for got in trouble was the beginning of the end for many folks. For many people, it was literally impossible to recover once the 'Universal Defaults' started, and generally once there was one, the others would follow. A person could be financially stretched, but 'OK', then overnight the monthly interest charge was suddenly more than even the minimum payment (I had one card where this was the case). It was a nightmare for many people, and it was fundamentally unfair - you weren't even able to close the account yourself with the old APR. At least now when they close the account, you get to keep the old terms.

Right, the CARD Act banned Universal Default (at least on current balances), any APR changes had to be based on actions on that card (such as paying late) But as Uncle B says, a few lates on card A means your score drops, and the issuer of card B decides you are a risk and CLDs you. They didn't raise your APR based on the lates on A, but......

Re: Is universal default still around

Anonymous — Thu, 13 Aug 2015 00:54:37 GMT

This is also another reason not to have 4 Citi cards and 1 American Express. Who Me?? when it's all the same family you can get baddabingged by bank real quickly as well.

Re: Is universal default still around

Anonymous — Thu, 13 Aug 2015 01:22:29 GMT

Simple solution: Don't carry a balance.

Maybe that's too simple for some?

Re: Is universal default still around

Anonymous — Thu, 13 Aug 2015 01:27:31 GMT

@Anonymous wrote:

Simple solution: Don't carry a balance.

Maybe that's too simple for some?

It wasn't carrying balances that was the issue in the past, more lates and defaults.

I agree it's better not to carry a balance (especially with a non-zero APR) but sometimes you might have to.

To generalize your advice (and equally helpful) "Avoid bad things and you will be fine"

Re: Is universal default still around

Anonymous — Thu, 13 Aug 2015 01:29:14 GMT

LoL I thought Canadians were nice.

The question was just a discussion of Policy. Banks can do what they want in-house.