NY Outlaws universal default

One of my very first posts on this blog was about the evil that is universal default. Back then, nobody had really heard of it, and I can only think of one or two other people who'd discussed it publicly.

Now everyone talks about UD, and NY State has gone so far as to ban universal defaults on credit cards. But it's not making major headlines: here are a couple of stories about the new law.

This puts credit card companies in a bind; they'll have to set a different set of standards for the 7% of their customers whom they are now prohibited from defrauding. The creditors successfully argued in California a few years ago that a law requiring much more disclosure on credit card statements to California consumers was an unfair burden on them. I'd bet they'll try the same thing here. It's nonsense, of course, but it's worked for them before.

And if you don't live in NY, remember that there are good cards that don't have Universal Default clauses. Switching to one of them is the best solution.