What is a universal default clause?

A universal default clause is a part of many credit card agreements that states the credit card issuer can raise your interest rate if you fail to make payments on other debts. In Hawaii, this clause is more tightly regulated than in other states, due to the state’s existing credit card laws. Under Hawaiian law, credit card companies cannot impose a universal default clause unless they provide at least 21 days’ notice to the consumer. The notice must clearly explain the consumer’s right to terminate the agreement if the interest rate is increased. Consumers should be aware of any universal default clause in their credit card agreement, including any notification requirements by the issuer. It’s important to make payments on time and pay off any credit card balances promptly. If the issuer does impose an interest rate increase, the consumer can consider switching to a credit card that does not include a universal default clause. It’s also important to remember that, in Hawaii, companies are prohibited from imposing universal default clauses on minors. As such, it’s essential for parents to educate their children about how to responsibly manage credit cards and to always read credit card agreements before signing.

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What is a universal default clause?

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