However, since Mr. MoneyDummy has been on the other side of the financial desk, he’s pointed out that there’s often good rationale behind universal default: when people’s credit ratings begin dropping heavily, banks stand to lose if the person goes bankrupt. They raise the interest rates to try to get just a little bit more money before that happens. In many cases, they know they’re never going to get their money back; universal default is an attempt to mitigate their losses somewhat.

Thanks for the heads up!

Universal Default seems to me like a nice example of how the rich are separated from the poor–it brings an “all or nothing” aspect to credit card debt.

I understand why credit card companies employ it, but it does seem excessively punitive. Presumably if enough people hate it, then a company will come out that does NOT use it, and everyone will flock to that card. That’s a long-term economist’s view though.

Anyone else seen this? Know what it is?