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That low rate you receive for a credit card offer can instantly increase to a much higher rate if you miss making one payment. Even worse, your credit will be damaged. Therefore it is very important that you carefully read the terms and conditions of your credit card so that you know all of the outcomes if you neglect timely payments.

**Important fact! - It is possible that your credit card rate increases by as much as 20% if you miss a payment!

There are two types of defaults. Both are gone into detail below.

The Default Clause
This clause enables your credit card issuer to increase your interest rate when you miss a payment.  If you want to eliminate the possibilities of having your interest rate increased, you must familiarize yourself with your card's default rules. Credit card companies make their money in interest and are very aggressive in imposing the 'default clause' when payments are missed. They give no second chances.

The Universal Default Clause
This clause has much worse consequences for being late on your credit card payment. If you miss your payment for one card, and you have other credit cards, the interest rates of the other cars will also increase. How is this possible? It is very common for credit card issuers to check your credit regularly to see if you are making all of your credit card payments on time. If you have a missed payment, they will automatically increase your interest, even if the missed payment was not for their issued credit card.

Avoiding Defaults
The bottom line is, pay your credit cards on time to avoid paying higher fees. Below are some basic tips to follow that will help you avoid missing a payment.

1. Don't apply for a credit card that has a universal default clause.

2. Settle your monthly credit card bill on time, every month! Take into consideration the time it will take for your payment to travel to the credit card issuer in the mail. Also, if possible, utilize online banking to pay bills to ensure instant account update.

3. Never exceed your available credit limit. Keep your balances low. A good rule of thumb is to never exceed 40% of your available credit line.

4. Get a copy of your credit report to make sure that your accounts are being reported accurately. Learn more about credit reports.



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