"The Credit Card Sinkhole" (or how the CC companies screw us) [View All]

[ailsagirl]

It didn't matter that the World Trade Center towers had just fallen or that her soldier husband was facing combat in Afghanistan or that the anthrax scare had slowed the mail. The punishment for the California resident's late credit card payment: an interest rate increase to 27 percent, which added $300 per month in fees to an already hefty balance.

Nor did it matter when the payment of an other California cardholder arrived on the due date-- but after the hour his card issuer had set as a deadline. He, too, got late penalties.

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The latest punishment--known as "universal default"--allows for virtually any late payment to trigger interest hikes and additional fees on other loans. Heather McGhee of Demos, a New York public policy research group, says, "Today, with universal default, if you're late paying your credit card bill, your insurance, mortgage, or car loan rates can also increase."

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Not that card issuers make it easy for customers to pay on time. In addition to strict hour deadlines, bills are now mailed closer to the due date, leaving customers with one week less to submit payment than a decade ago.

From AARP Bulletin, April 2005, pg. 30