Citigroup Puts an End to Universal Default

March 5, 2007

Citi

It’s very refreshing to hear news of a credit card company actually doing something positive once every blue moon. Citigroup, which is the third largest credit card issuer in the U.S., said that it is essentially getting rid of universal default.

Universal default is a clause on credit card agreements where a credit card issuer can raise your credit card interest rate if you default on any other obligations to other lenders. This practice seems to punish you for making mistakes with other lenders. So if you happen to default on a loan that doesn’t even have to be another credit card, all of your credit cards can shoot up to 24% interest and even higher in some states! How fair its that?

Here’s the link to the Reuter’s article.

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