How to find a fixed rate credit card

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If you have a balance and can get a low interest rate, you might consider purchasing a fixed rate card. But fixed rate credit cards can be difficult to find and can have other drawbacks. Here is a rundown on whether these cards might be a good option for you.

What Are Fixed Rate Credit Cards?

More credit card today have a variable annual percentage rate, which means that the interest rate will increase or decrease based on the benchmark rate, such as the prime rate. But with a fixed rate credit card, the APR is not tied to an index. The interest rate generally stays the same for the first year you open the account, but it can change under certain circumstances, including if you are more than 60 days late on your payment or if you have a promotional rate that has ended.

“If a fixed rate card is available, one of the benefits is that the rate will be more predictable,” says Deborah Goldstein, executive vice president of the Center for Responsible Lending, a nonprofit research group. “This could be a good way to manage both the interest you accumulate and how you will pay the principal and interest on the total balance.”

You probably won’t find a fixed rate card from a major issuer. Many banks have stopped offering them because they don’t want to be blocked when rates rise. Most fixed rate cards are available from credit unions or smaller banks.

April Lewis-Parks, director of education and corporate communications for Consolidated Credit, a not-for-profit credit counseling agency, says, “Credit card issuers want to be able to make more money and increase revenues. interest rates based on Federal Reserve and / or index rates. “While most credit card issuers only offer variable interest rates, credit unions and small banks are always ‘fighting for new customers’ and may offer fixed rate credit cards when the rates are low to attract new customers.

Fixed rate cards were easier to find until 2009, when Congress passed the Credit Card Accountability Responsibility and Disclosure Act, which placed restrictions on card issuers and pushed many to offer variable rate cards exclusively. Before Credit Cards Act, interest rates on fixed rate cards could be changed as long as the issuer sends a notice by mail within 15 days of the change.

“These cards weren’t really fixed at all,” says Lewis-Parks.

Can Fixed Rate Credit Card Rates Go Up?

Absoutely. Fixed rates don’t fluctuate as easily as variable rates, but they can change even if you haven’t been late on your payment.

With a variable rate card, your interest rate may change for the first year after a promotional rate ends or the prime rate changes. No notice is required for changes in promotional or preferential rates.

The interest rate on a fixed rate card cannot change with the prime rate in the first year, but it can go from a promotional APR of 0% to the regular fixed rate during that period. Your issuer can increase your rate after the first year with 45 days notice. You can opt out of the rising interest rates and cancel your accounts while paying off balances below the old lower interest rate, although this option may affect your credit rating. But if you keep the credit card open, the issuer determines the rates for new purchases, explains Lewis-Parks.

When can a fixed rate credit card be a good choice?

If you are purchasing expensive items, such as furniture or appliances, or pay for home maintenance projects, such as roof repairs. In these situations, you may plan to keep a balance on your card. So if you can get a attractive fixed rate, you will know each month what your payment will be. You won’t have to worry about a surprise rate hike, like what you might see with a variable rate card. This makes planning easier, says Lewis-Parks.

To consolidate a loan or manage a debt. A card with a low, fixed rate can be a great tool for balance transfers – with a caveat, according to Lewis-Parks: “People just need to know that most card issuers charge a balance transfer fee of 3% to 5%. “

However, in both of these situations, a card with a 0% introductory APR might be a better choice. A interest free credit card offer will be lower than a fixed rate offer, provided you pay off your balance before the promotional APR expires.

Disadvantages of Fixed Rate Credit Cards

A fixed rate credit card that locks you into a high APR is a bad choice. If a fixed rate card is below average – which, according to US News data, is usually around 17% to 24% – this could be considered a good fixed rate, according to Lewis-Parks.

For example, the Green Dot primor Mastercard Classic secured credit card has a fixed APR that is 13.99% lower than the average. But the Indigo Platinum MastercardThe fixed APR is 23.9%, which is near the high end of the average.

You should also consider other costs that might apply to a fixed rate card. The Green Dot primor Mastercard Classic secured credit card requires a security deposit of at least $ 200 and an annual fee of $ 39. The Indigo Platinum Mastercard may change an annual fee of up to $ 99.

Other Considerations for Fixed Rate Credit Cards

Still hesitating between a fixed rate or a variable rate credit card? Here are some other things to think about:

  • You’re not limited to a fixed rate card if what you’re looking for at the end of the day is a low APR. Variable rate cards may have below average APRs or introductory 0% APRs on purchases or balance transfers.
  • Confirm your interest rate and check your balance every month. Since the rules are different for variable and fixed rate cards, “you may receive different notifications from the credit card company, depending on what you have,” Goldstein explains. “So if you read your statements every month, you’ll be in a much better shape to know what’s coming up.”
  • Make a goal of paying off your balance in full each statement period so you don’t have to worry about the APR at all. Jory McEachern, director of operations for ScoreShuttle credit repair, says, “An interest rate doesn’t matter if, in fact, you are paying off your balances every month. “


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