I hope you read the fine print.

In many of today's credit card application contracts there is reference to a set of terms should you default on a payment. You may start out on a low interest rate but find, by missing a payment, you will end up converting to the default interest rate - usually 20-30% higher than you were initially paying. There's nothing new about this practice yet there are still many credit card users who are unaware of this policy because they don't read the fine print carefully.

However, this little nuance is minor compared to what is being defined as the Universal Default clause. This clause states that if you miss making a payment to ANYONE that reports on your credit history your interest rate will immediately convert to the default rate.

Take this in for a moment.

You could have faithfully used your credit card, making payments as and when they fall due yet you miss a payment on your telephone bill that is reported to the credit reporting agencies and immediately your credit card institution hikes the interest rate. And they're well within their rights to do so.

For anyone who is looking to accept a really low interest rate for a new credit card make sure you read through the contract and understand all the fine print.

Source: Bill Burt "'Universal default': Lenders gang up on late payment"