What is a universal default clause?
A universal default clause is a feature of many credit card contracts that allows a credit card issuer to increase your interest rate when you fail to make payments on other debts. This means that if you have a credit card from one company and don’t make payments on another loan, the credit card company can increase the interest rate you’re paying. In Delaware, the law limits how much credit card companies can raise your interest rate and when they can raise it. The law also requires that credit card companies give you 45 days’ notice before increasing your interest rate, even if it is due to a universal default clause. If you cannot pay the higher rate, you should contact your credit card company to discuss possible options. Ultimately, it is best to avoid universal default clauses by making payments on time for all your debts.
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