Did you know that many credit card issuers will charge you their default rates if you are late with a payment on a completely different account? This long-standing practice is called "universal default." It can especially hurt cardholders if there are errors in their credit reports.

The way it works is that credit card issuers routinely pull customers' credit reports to see if cardholders are current on their other bills. If they spot instances of delinquency on other accounts, they raise the consumer's rate to the default rate as a way of penalizing the cardholder for late payments.

According to Consumer Action's 2007 Credit Card Survey, many of the top credit card companies claim they no longer have universal default practices. In reality, card issuers have simply renamed the penalty and moved it to the "change in terms" section of the cardholder agreement. It often goes unnoticed by consumers.

Card issuers state in these sections that they can raise their rates at any time for any reason. Consumer credit information is often mentioned as one of the factors for such rate hikes. The Consumer Action link cited above contains the policies of the top ten card issuers.

It appears that Congress is upset about these practices. The debate is now whether to force industry standards through legislation, rulemaking or to allow card issuers to voluntarily come up with their own standards that hopefully eliminate these practices.

We promised you that we’d be announcing new features soon; here they are.

We’ve been blogging a lot about how person-to-person lending (or p2p lending) helps borrowers get better rates and provide a more responsible way of borrowing than credit cards based on the findings of the latest GAO study, but haven’t talked much about the other side of the equation yet: lenders.

We haven’t talked much about how person-to-person lending, and specifically Lending Club, helps lenders get better return on their money than what they would get on their savings account, CDs, and is some cases stocks, bonds and other financial instruments. We will come up with a detailed comparison of loan portfolios against other asset classes in an upcoming post. We know of at least one investment banker who will be looking at this closely.

As for now, we are excited to unveil a new feature for Lending Club lenders: a lot more credit information is now available about the borrowers and their loan applications, including the number of open credit lines, the revolving credit balance, revolving line utilization, date of the last delinquency, the number of 30+ days late payments in the last 2 years and other credit information. See an example here (click graphic to enlarge):

Let us remind everyone that borrower profiles are anonymous: borrowers are only identified with a screen name that they choose. And, most of the information displayed above is already factored into the FICO score. The FICO score is the primary indicator for loan grade (A to F).

Lenders now have additional information available to make their own determination as to borrowers’ credit worthiness. Better rates. Together.

We are now entering our 4th week helping borrowers and lenders bypass the banks and get better rates. Most of our borrowers can register and apply for a loan in less than 10 minutes. Lenders have been telling us how simple, easy, and fast LendingMatch is.

We are very far from perfection at this point, and are excited to be working on many improvements. You will see a number of new features and enhancements coming up in the next few weeks. Over the last three weeks, we have received feedback from Facebook's forums, our Lending Club group on Facebook, this blog, our customer service line and directly by email to various members of our team. We appreciate all feedback, good or bad.

In addition to all existing channels, we added on Wednesday a “feedback” link on every single page of https://secure.lendingclub.com and would love to gather even more feedback at feedback@lendingclub.com.

We are making all efforts to be responsive to your inquiries, analyze your behavior on https://secure.lendingclub.com, understand common trends and patterns and adjust our development priorities based on these trends. We truly believe in building up our platform with you as well as for you.

We look forward to your comments, thoughts, and ideas. We will build a better platform together.

Earlier this week, LendingTree released the results of its first annual LendingTree Smart Borrower Survey, which seeks to help improve people’s borrowing decisions and behavior. The survey, which was conducted by MarketWise, Inc., maintains that nearly half of Americans are concerned about their outstanding credit card debt.

Among the survey’s key findings:

• 85% of the respondents have debt outstanding. The most common forms of debt are credit cards (63%), mortgages (52%), and automobile loans (37%).
• 47% of the respondents spend about half or more of their gross income on their total debt expense.
• 30% of respondents who carry a balance have credit card debt of $10,000 or more outstanding.

If these findings aren’t troubling enough, there’s more. According to the survey, a significant number of respondents have experienced some of the negative sides of credit cards we’ve mentioned in previous posts.

Apparently 35% of surveyed online consumers have been surprised by unexpected charges and fees associated with their credit cards, including: teaser rates (14%), over-limit charges (12%), annual fees (11%), finance charges (9%), and fees for ATM (9%). For more details on this, we recommend scanning through the GAO study.

It’s time to leave your credit cards behind, once and for all!

Clearly, we're not the only ones talking about Americans' excessive credit card debt. See this report from CNN Money, which offers a list of money management tips. One troubling factoid grabbed our attention.

The average American household with at least one credit card has nearly $9,200 in credit card debt, according to CardWeb.com, and the average interest rate runs in the mid- to high teens at any given time.

More alarming is the fact that many people only make the minimum payments each month, which means they could be paying off their credit cards over a period of decades. We addressed this issue in a previous post when we discussed a recent GAO study.

A key benefit we offer borrowers is consistency. All payments are the same amount each month because Lending Club loans are installment loans. There are no variable finance charges each month.

When you have equal payments throughout the loan period, you can be more financially responsible. And when you manage your finances more efficiently, you will be improving your credit rating with every on-time payment you make!