Friday, May 18, 2007
For What It's Worth: Credit Card Clause
What you don't know about your credit card can hurt you. Seven's Craig Stevens says, For What it's Worth, paying another bill late could cause your interest rate to triple.
WSVN -- Has your credit gone to the dogs? Well, you're not alone.
Huguette Orlando was shocked when the interest rate on one of her credit cards started rising.
Huguette Orlando: "Never paid them late, paid them on time, never had any trouble with the credit card company, when I called and spoke with the supervisor there."
That's when she was told her credit score had dropped, and that caused her interest rate to triple.
Huguette Orlando: "I was told, yes, it's written in my policy, and I need to go back and read it, and it is there, no one ever pays any attention to it."
What's written in the fine print is something called the universal default clause.
Allie Jablon: "What the universal default clause says is if you make a late payment to somebody else, somebody who doesn't pertain to that credit card company, whether it be the utility bill, the mortgage payment on your home, your car bill, your phone bill, that credit card company can actually triple your rates overnight."
Seven's financial expert Allie Jablon says the top three default triggers are: A drop in your credit score, making a late payment on your mortgage or car loan.
Allie Jablon: "It's hard to believe, but 40 percent of the credit cards that are out there and being issued actually include the universal default clause."
But Allie says there are ways to protect yourself:
Read the fine print before signing up for a credit card. If your card has this clause, transfer the balance to a card that doesn't, and make sure you pay your bills on time.
Huguette consolidated her debt, cut up her credit cards and is now free from creditors.
Huguette Orlando: "Now I'm living free, I'm happy, and I would advise everyone else to do just like me."
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