New York — One late payment on your credit card can pack a pretty hard punch. Not only with fees and rate increases on the card in question, but also with penalties on your other credit cards.
Almost half of all credit cards have so-called universal default penalties, which allow the credit card company to increase your interest rate if it discovers a late payment on your credit report for any credit-card account or loan or other debt involving any other company. It doesn't matter if you've never made a late payment to that particular company.
This year, 44 percent of credit cards have universal default penalties, reports Consumer Action, a San Francisco-based research group. And the number is increasing -- only 39 percent of cards had them in 2003.
Penalty rates easily can top 29.99 percent compared with the average annual rate of between 14 and 16 percent. These penalties go into effect when you are perceived as a delinquent borrower.
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