How To Find Fixed Rate Credit Cards

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These days, almost all credit cards carry variable interest rates. If you are looking for a fixed rate credit card, you have probably noticed that the overwhelming majority of card issuers simply do not offer fixed rate cards. That’s because they don’t want to be stranded when the Federal Reserve raises interest rates.

But you should know that a credit card with a variable APR won’t leave you at the mercy of wildly fluctuating interest rates. In fact, in many cases, you can get the stability you are looking for with a variable rate card and, depending on your creditworthiness, with a lower interest rate than you expected.

Let’s take a closer look at why fixed rate cards are so hard to come by and how you might be better served by a variable rate card anyway.

What is a fixed rate credit card?

Most credit cards today follow a variable rate structure, which means their APR is tied to an underlying index like the prime rate. As the indexation rate rises and falls, the APR on variable rate cards usually follows. On the other hand, as the name suggests, a fixed rate is not automatically affected by fluctuations in the prime rate.

Fixed rate credit card offers are rare. While there are options nationwide, such as UNIFY Financial Credit Union, you will usually find them at your local bank or credit union.

Fixed rate credit cards aren’t as stable as you might think

It’s important to understand that a fixed rate credit card doesn’t mean you’ll have the same interest rate forever. Card issuers can and do increase your interest rate, even with a fixed rate card.

A fixed rate card will not fluctuate with the prime rate, but a change in your circumstances, such as a drop in your credit rating or missed or late payments, may cause your issuer to increase your interest rate.

The virtual disappearance of fixed rate cards can be attributed more or less to the Credit Cards Act of 2009. This legislation ushered in a number of consumer protections, including protection against random rate increases without warning. their credit cards.

By the law, card issuers must lock APRs for the first year of an account, but after that they have the right to change interest rates and other card terms, provided they provide cardholders with 45 days written notice. As long as this notice period is met, an issuer may decide to change your interest rate on a fixed rate card.

According to Ted Rossman, senior industry analyst for Bankrate.com, “[The Credit CARD Act] Basically, the easiest way for card issuers to increase rates on existing balances is to link them to an underlying index, like the prime rate, ”Rossman said. “So that’s why we see so many cards these days – in fact, almost all credit cards – have moved to this variable rate structure.”

Variable rates are not necessarily as volatile as they seem. “Even if and when the Fed raises interest rates, what we’ve seen in the recent past is that they’ve been reluctant to do so,” Rossman said. “Even when they do, maybe it goes up a quarter point at a time.”

The best card for you probably comes with a variable APR

Looking for a fixed rate credit card because you have to pay off a large purchase over time and don’t want to be derailed by interest rate hikes while still carrying a balance? Maybe you consolidate high interest rate debt and want a guaranteed lower interest rate card to avoid surprises while you work to pay it off.

While a fixed rate credit card might look appealing in these cases, you’ll probably be better off with an introductory 0% APR card that offers an extended period without any interest charges. As long as you’re able to pay off the balance of that new fridge or a well-earned vacation during the APR introductory period, you’ll have the advantage over a card that charges interest, whether it’s ‘a fixed or variable rate. .

Here are some of the best introductory 0% APR deals currently available that offer promotional periods for purchases and balance transfers:

If you feel that you won’t be able to pay off the balance during the promotional period, or if you regularly plan to keep a smaller balance every now and then and need a longer term option, you may also consider an interest credit card. These cards will charge interest from day one, but may offer a lower variable rate than other card options, depending on your creditworthiness. It should be noted that some of the cards with great introductory APR offers may also offer a low current APR to cardholders (again, depending on creditworthiness).

Here are some of the best cards with potentially low interest rates:

The bottom line

While a fixed rate credit card may seem like the best way to keep your interest charges under control, there are better ways to pay less interest that are considerably easier to find. Whether your credit card has a fixed rate or a variable rate is not as important as just getting the lowest interest rate possible, or the promotional interest rate you need to get your breath away. to pay off a balance. If you know you won’t be able to pay off your entire balance every month, focus on getting the lowest interest rate possible, whether it’s a card with an introductory period. 0% or a credit card with a low APR.


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