1. The rate of borrowers who fail to remain current on their loans. It is a critical piece of information used by lenders to determine their risk exposure and economists to evaluate the health of the overall economy.
2. The interest rate charged to a borrower when payments on a revolving line of credit are overdue. This higher rate is applied to outstanding balances in arrears in addition to the regular interest charges for the debt.
Prior to passage of the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009, the language in some credit card agreements allowed credit card companies to hike the interest charged on the card balance to the default rate even if consumers were current on their account but had an outstanding balance on another credit card (a practice known as "universal default").
The law, which took effect in the fall of 2009 imposed sweeping new restrictions on the credit industry, including the elimination of the universal default rate.
Investment dictionary. Academic. 2012.
Look at other dictionaries:
default rate — An alternative higher rate of interest or a premium specified in a loan document to be added to the contractual rate of interest that can be charged by the lender if the borrower is in default. American Banker Glossary … Financial and business terms
Cohort default rate — A cohort default rate is the percentage of a school s borrowers who enter repayment on certain loans during a federal fiscal year (October 1 to September 30) and default prior to the end of the next one to two fiscal years. The United States… … Wikipedia
Constant Default Rate - CDR — An annualized rate of default on a group of mortgages, typically within a collateralized product such as a mortgage backed security (MBS). The constant default rate represents the percentage of outstanding principal balances in the pool that are… … Investment dictionary
default interest provision — A provision in a contract which: • Provides a contractual sanction against non payment of a sum of money; and • Is a form of liquidated damages for that non payment. A default interest provision is nearly always included in an agreement where… … Law dictionary
Default argument — In computer programming, a default argument is an argument to a function that a programmer is not required to specify. A default value is specified when the function is declared and the default value is automatically passed to the function when… … Wikipedia
Default trap — The default traps in sovereign borrowing refers to the idea that once a country falls into a default, it is more likely to default again in the future, compared to another country with identical future output ability. The idea of default traps is … Wikipedia
Default (finance) — Finance Financial markets Bond market … Wikipedia
Default Probability — The degree of likelihood that the borrower of a loan or debt will not be able to make the necessary scheduled repayments. Should the borrower be unable to pay, they are then said to be in default of the debt, at which point the lenders of the… … Investment dictionary
Default network — Graphs of the dynamic development of correlations between brain networks. (A) In children the regions are largely local and are organized by their physical location; the frontal regions are highlighted in light blue. (B) In adults the networks… … Wikipedia
Default notice — All credit applications (e.g., personal loans, credit cards or store cards) opened in the United Kingdom are regulated by the Consumer Credit Act 2006. This piece of legislation requires that creditors must issue a default notice to any customer… … Wikipedia