You apply for a credit card that has an advertised 10% APR. The card is approved and you spend money on it. Some months later you notice that the interest rate cannot possibly be 10% APR but is nearer 30% APR. You immediately claim you have been cheated; but the credit card provider counters that they have invoked the Universal Default Penalty Clause under your agreement with them. Bewildered you wonder what on earth a Universal Default Penalty clause could mean. And the answer is:

Credit score rating

Many customers apply for a card at a time when they have a good credit rating in the belief this is the one and only time the provider checks their credit score rating. In fact this is a mistake that could cost you dearly as the card provider will carry-out periodic checks on your credit score rating and will adjust the APR chargeable on your card upwards if there is any variation in your rating that indicates you have become more of a credit risk. The scary part here is that you may not actually have failed to repay any of your debt in the interim part, but merely by exposing yourself to additional credit the rating agency may have deemed that you are more of a credit risk. As such, the card increases your APR, you are now a