Identification

The universal credit card rate is a higher interest rate than a card's standard rate. This higher rate takes effect if you make a payment more than 30 days late to any creditor that appears on your credit report.

Access to Credit Report

Entering into a credit card contract with a company gives the company the right to access your credit report at any time. This allows your credit card company to check your credit report as regularly as its policies define to check your credit history.

Types of Items

Items that could cause a change to the universal default rate include late payments to other credit card companies, utility companies, student or auto loans. Any item sent to a collections agency also has the potential to trigger the universal rate, such as an unpaid medical bill or an unpaid premium to a CD-of-the-month club.

Notification

Because you received the rate and its terms when you first obtained your credit card, your credit card company is permitted to switch to the universal default rate without notifying you. When this occurs, the only sign of the increased rate is an increase in your minimum payment and the rate information printed on your monthly bill.

Solution

Not all credit cards have universal default rates. When you apply for a credit card, read over the contract carefully.

Source:

University of Idaho: Credit Card Universal Default Clauses Translate to Increased Costs