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From Wikipedia, the
free encyclopedia
Credit card debt is an example of unsecured consumer debt, accessed through
credit cards.
Debt results when a client of a credit card company purchases an item or
service through the card system. Debt accumulates and increases via interest
and penalties when the consumer does not pay the company for the money he or
she has spent.
The results of not paying this debt on time are that the company will charge
a late payment penalty (generally in the US from $10 to $40) and report the
late payment to credit rating agencies. Being late on a payment is sometimes
referred to as being in "default". The late payment penalty itself increases
the amount of debt the consumer has.
When a consumer has been late on a payment, it is possible that other
creditors, even creditors the consumer was not late in paying, may increase
the interest rates the consumer is paying. This practice is called universal
default.
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