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Michael Jackson was right, someone is watching you…Credit Card companies!  Not only are they paying attention to how you pay any amount you owe them, they are also watching closely to see how you pay your other bills.  And if they don’t like what they see, they can raise your interest rate without your knowledge.  The practice is known as Universal Default.   Basically, it means that if you pay any bill late, even your cable bill, your credit card company can raise your interest rates.  Some credit card companies will raise your rate up to almost 30%.  They do this even if you have a perfect payment history with them.  Credit card companies justify this rate hike because they now see you as a risk.  Higher risk equals higher interest rates. 

It is estimated that nearly one-third of lenders have universal default clauses.  They keep track of you by periodically checking your credit report.  They can check yearly, quarterly, or even monthly.  People with a history of late payments are generally checked more frequently than people with a history of on-time payments. 

There are a number of concerns about universal default clauses, the most obvious of which is that a person’s payment history with one company should not affect their interest rates with another, particularly when the two have nothing in common with each other, such as a phone bill and a credit card.   The other problem is that the practice can easily lead to a vicious cycle in which a person cannot get out of debt because of high interest rates.  Compounding the problem is when credit card fraud or identity theft affects an innocent person’s credit score.  While this can be corrected on a credit report, the creditor has no obligation to return the interest back to its original rate. 

 If you have had your credit card interest rates increased even though you have been on time with your payment to that company, you may have fallen into the universal default trap.  The mounting debt caused by higher interest rates can put you into a hole that you would never be able to pay your way out of.  That’s where I can help.  If you have mounting debt, whether credit card, mortgage payments, medical bills or other types of debt, contact the law office of Zach Bushatz today to see how I can help you get out of debt. 

Dayton Bankruptcy Attorney Zachary Bushatz was raised in Marion, Ohio. He graduated from Ohio Northern University with a triple major in History, Political Science and Criminal Justice, magna cum laude. While in undergrad, Mr. Bushatz received the Walter Pengry Rogers Award for outstanding academic achievement. Mr. Bushatz was also a four year member of the Ohio Northern Mock Trial Team, on which he won numerous awards including Best Attorney and Best Witness.   Mr. Bushatz attended Ohio Northern University Pettit College of Law on the Dean’s Merit Scholarship. While in law school, Mr. Bushatz was a member of Moot Court. During his second year of law school he was a team member of the New York Bar Association Traveling Team. Mr. Bushatz was an Associate Justice on the Moot Court Executive Board his third year.  While in law school, Mr. Bushatz also worked extensively in the area of bankruptcy. He was a legal extern for bankruptcy Judge Richard Speer at the Northern District of Ohio in Toledo. He also worked for a chapter 7 trustee and an attorney that focused on representation of debtors.  If you are in need of bankruptcy advice in Ohio, contact Dayton Bankruptcy Attorney Zacahary Bushatz at 937-879-9542 today!

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