| Answering the question of why a great number of | | | | of one lender charging a higher price when their |
| credit card bills arrive from Sioux Falls, South Dakota | | | | customer defaults with another lender has been |
| and what the term "universal default" means. | | | | compared to having a cartel, or price fixing structure. A |
| Many people often wonder why it is that their credit | | | | major concern to many folks is the possibility that the |
| card bills come to them from Sioux Falls in South | | | | credit card shown as being in a state of default may |
| Dakota. The simple reasoning for this is that South | | | | not simply be so. It very well could be the result of an |
| Dakota is the home of very liberal laws concerning | | | | error on the part of the credit card issuer. In cases |
| consumer protections for credit cards. The state of | | | | such as this, the consumer may have full legal rights to |
| South Dakota receives a great deal of revenue from | | | | have their credit report corrected to reflect the truth of |
| it's partner in crime, the credit card industry. Albeit it is | | | | the matter, the credit card issuers are under no |
| certain that the absence of corporate income taxes | | | | obligation to revert the interest rate back to what it |
| plays a huge factor as well. There are many financial | | | | was before the mistake occured. It simply goes |
| service companies located in South Dakota include | | | | without saying that this sort of position leaves many |
| Great Western Bank, Total Card Inc., BankFirst, Capital | | | | credit card holders in a state not unlike that of anger. |
| Card Services, HSBC, PREMIER Bankcard, and Wells | | | | Simply put, this is not right. |
| Fargo. | | | | There have been attempts by members of congress |
| Credit card fees over the years recently have | | | | to simply outlaw universal default. One such |
| skyrocketed from $2.6 billion in 1980 to over $22.5 | | | | congressman was Sen. Chris Dodd, D-Conn. Still, these |
| billion in 2006. The kicker that has most ticked off | | | | card companies are also amongst the political party |
| consumer advocates is a practice called "universal | | | | contributors, and seeking meaningful changes such as |
| default". In this scheme when you are late paying any | | | | these in the face of subtle corruption has always been |
| bill, the credit card company will raise your rate, sending | | | | a daunting task. "I've never been able to get a bill |
| some rates far higher than 20%. There have been | | | | passed of any major significance because they're so |
| many criticisms of this structure including the concept | | | | big and so influential," says Dodd. |