The NewStandard ceased publishing on April 27, 2007.

Credit card coâ€TMs impose higher rates under ‘universal default polic

by C.P. Pandya

Sept. 8, 2004 – Over 40 percent of credit card companies in the US have adopted a "universal default" policy -- meaning they can suddenly jack up lending rates based on consumers’ relationships with other creditors. Over the last five years, consumers have unexpectedly seen some credit card rates jump to as high as 30 percent, owing to missteps with other creditors, for a mortgage, car loan or other debt. Lending institutions such as Citigroup, American Express and J.P. Morgan & Chase may raise rates on credit cards even if a consumer has always paid that credit card bill on time.

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Consumer advocates say the practice of universal default has deepened the debt burden and damaged the credit quality of many Americans. The credit industry draws 35 percent of its income from penalty fees, nearly double the percentage of just a decade ago. As profit from penalty fees has increased, average household credit card debt has too. Recent figures from CardWeb, a research firm that tracks the use of credit cards, peg the amount at over $9,000.

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The NewStandard ceased publishing on April 27, 2007.

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C.P. Pandya is a contributing journalist.

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