Citigroup Stops Using Universal Default

Citigroup announced it will stop using the “Universal Default” clause for credit card borrowers, which should come as a surprising piece of good news for consumers.

Universal Default is a contractual clause that lets a lender raise your rates to the default rate if you default on obligations with other lenders. Default rates are usually 24% and up.

A debtor who defaults with one lender represents an increased financial risk, and it makes sense for other lenders to raise their rates to reflect the increase. However, going from the low teens to 24% is simply onerous. Also, it just doesn’t seem to make sense, economically or from a customer service standpoint, to treat someone who has defaulted elsewhere as if they have defaulted with you.

In any event, Universal Default is gone at Citigroup. Here’s hoping other credit card companies will follow suit. — BEN POPKEN

Citigroup eases credit card rate-rise policies [Reuters] (Thanks to Roxxane!)
(Photo: justin)

About this photo, Citigroup’s logo contains a red umbrella. This picture shows young people frolicking under a red umbrella. There you have it. UPDATE: elton notes that Citigroup actually dropped the umbrella from its logo. We think this makes this picture’s use even more poignant. Citigroup has dropped (one of) its old ways. The duo are cavorting under a vestige of the old system. It’s like dancing with a piece of the Berlin Wall. Very meta.


Edit Your Comment

  1. elton says:

    Umm. Citi no longer uses that umbrella..

  2. Henri says:

    Doesn’t make sense to increase the debt burden on someone who is already having problems handling what he has.

    I guess kicking a guy when he’s down is just so much fun.

  3. shaunirving says:

    … and the plants represent all the greenbacks this couple will save, you metaphorical scalliwags.

  4. joeblevins says:

    The Umbrella originally belonged to Travelers Insurance. Citigroup bought travellers and therefore aquired the umbrella. Then recently, they spun Travelers back off to themselves but kept the Umbrella. Just recently they have sold the umbrella back to Travelers, but in all reality, it was really the Travelers symbol, and not Citi.

  5. katana says:

    Wow. But I think the real question is what will they replace it with?

  6. Trick says:


    Wow. But I think the real question is what will they replace it with?

    Exactly, I can’t believe Citibank will actually do something that is good for the customer.

    Still remember the Citibank checking account I had. The checking account that “required” a hold on $1000 *IN CASH* for two days, according to the teller/manager.

  7. FLConsumer says:

    They might not replace it with anything… There’s no use charging extra fees if you’re not going to get paid. Conversely, people might be more willing to pay bills which don’t have huge fees being tacked onto them. I’d assume Citi’s more interested in getting their money back than fees on an account which they’d be forcing into default by adding extra fees.

  8. katana says:


    Who said that they weren’t getting paid? With that new fantabulous bankruptcy legislation they are all but guaranteed payment. Willing borrower or not.

    I think this has more to do with its execs getting hauled out in front of congress than anything.