Universal default is another scam cooked up by the credit card companies. Basically, if you are late or have defaulted on a loan not associated with a credit card that practices universal default, said credit card company can raise your interest rates and make all sorts of trouble for you. Nice, isn't it? As if they don't make enough money gouging you already.

Here is an example from a friend of mine that had all sorts of trouble when one of his credit card payments was late. My friend had about 8 credit cards all with high limits. He had a terrific credit rating and was deluged with offers almost every day. Since his business is cash intensive, the extra credit lines helped and he never missed a payment. He usually had over 100k in revolving loans. He was happy, the credit card companies were happy as they were making money and life was grand. Until there was a mistake one day. For some reason, one of his payments to one particular company got hung up in the mail or got lost. To complicate matters, my friend had changed his phone number and there was a new mailperson on his route. Needless to say, because one of his payments was late, the credit card company did a little homework and found out that he had other cards with big lines. He finally receives his statement and to his horror they changed his interest rate from about 6 percent to over 22 percent. He was furious and called the company. This company practices universal default and also another horrific practice of deciding he had too much credit. Not only did they raise his rate, they chopped his credit line off as well. Needless to say, another company saw what happened and like a house of cards they all raised and chopped his line.

My friend has very little patience for this sort of business practice and decided the only revenge was not to pay. Which he did, on all the cards. We are talking over 140,000 grand. He figured that was good enough for them and didn't care what they did to his credit rating as he is elderly and wasn't going to purchase any big-ticket items soon. He was so furious that loyalty doesn't matter anymore in this day and age. All these companies care about is the bottom line, period. Now they screwed themselves and aren't getting a dime. Universal default is a stupid practice, and in his case cost all the companies dollars.

Something that used to be around years ago called customer loyalty is just a fantasy today. People aren't stupid, and if you treat them right most people will go out of there way to do right by you. But by being extremely harsh, as in his case, the companies shot themselves in the foot. Or in their financial bottom line.

In summary, universal default is a satanic practice that does nothing but foster ill will with customers. Whomever thought this ditty up needs to go back to business school and learn about something called customer loyalty. Companies can gain far more in the long-run by treating people like people and not numbers.

I say, serves them right!

Learn more about this author, Anthony Megna.
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