Credit Cards Defaulted

It's safer to apply for credit card with City

Citibank seems to be the only credit card issuer refusing from applying the practice of universal default in case of credit card payment abuse. So, applying for a Citibank credit card, you needn't be afraid of unexpected and annoying raise in credit card rates and fees if you happen to be late in paying a credit card bill of another credit card company.

Staying aside from such anti-consumer policy on the one hand and offering enticing credit card applications for best rewards credit cards with low rates and no fees on the other, Citibank may be proud of preserving the regular number of credit consumers.

As a credit consumer of whatever credit card company, you need to know what universal default is and how to avoid it. Universal default is a new regulation added to credit card terms and conditions and is intended to provide for more security of creditorsâ?? money. It is a joint venture of banks and credit card companies to protect their money if you default on any credit card bill.

Imagine, you're a regular user of American Express credit card. Due to some misfortune, loss of job or illness, you are late on your credit card bill or even skip paying it. This abuse of your credit obligations, makes the creditor harden the terms and calls an alert among other companies you cooperate with.

So, the other creditors join in and raise rates on their credit cards as well. This approach affects negatively your credit score and sometimes leads to bankruptcy if you fail to pay off the bills. Credit consumers may think of it as outrageous and unfair but they charge from their side only.

In fact, universal default is meant to protect credit card companies from money losses as a result of irresponsible credit card management. And it's a well known fact that the number of credit card holders displaying improper credit card management is continually increasing, putting the whole country to national debt.

But, unlike others, Citibank regards the universal default as a deceptive and unfair practice targeted against consumers and on its part has firmly declared it is not going to freely raise the rates and fees on credit card account until the credit card expires and one fills out a new credit card application.

Citibank is determined to follow its general policy and will allow a rate or fee increase only if the customer is late in this particular bank's credit card bill payment, exceeds he credit limit or pays with a check bouncing.

Well, now you know which credit card applications provide you with more or less financial stability but it may so happen that you are a regular client of quite a different credit card company, the one that approves of universal default policy and thus, you're exposed to definite risk. And as money lenders are not likely so far to abolish universal default policy, it seems indispensable for you as a credit consumer, to know how you can possibly avoid a boost in credit card rates.

Customers are most likely to be exposed to the rise in interest rates if they practice the following behavior:

· When you're late on a credit card bill;

· When you exceed the limit on any credit card;

· If you carry to much debt on the whole and use more than 50% of the credit limit available on an individual credit card;

· If you carry too many credit cards or make too many credit inquires.

All these points are vitally important to follow to avoid becoming victim of universal default. Also remember, that even if you happen to abuse one of these requirements, the most important thing is to be always in time with your credit card bills, as well as utility and magazine subscription bills.

Then, the terrifying universal default is sure to pass you by!

Doug Nicholas

Doug Nicholas, a financial consultant by profession with a Masters degree in International Business from Brown University, is also an ardent writer. Though he has a full time job at one of the companies listed on Wall Street, he does manage to squeeze in time to follow his passion. He puts his ideas to words in his articles related to finance and business.