Posts Tagged ‘fixed rate credit card offers’

In some occasions, you might be presented with two types of credit cards – one called a fixed rate credit card and the other having a variable rate. A bank representative or agent will explain the pros and cons of each type, and let you decide eventually.

For many years, financial service companies claims to offer low fixed rate credit cards, enticing people to avail of them. Some say that theirs is the lowest in the country and are competitive with other credit card companies.

What is a Fixed Rate Credit Card?

A nice article in ASAPCreditCard.com discusses the difference between the two. Here’s an excerpt from the article:

• Variable Rate: Variable rates are normally based on one of the following indexes: the PRIME RATE, the Federal Reserve Discount Rate, or the Treasury Bill Rate. The credit card company adds a “margin” to the index to come up with the variable APR. When the index goes up, so does the credit card rate. Likewise, if the index goes down, your credit card APR does as well.
• Fixed Rate: A fixed rate is supposed to be “fixed”. This means that the interest rate shouldn’t vary as long as you have your card. But here’s the catch: the credit card company reserves the right to change your rate at any time. As long as you are given at least 15 days notice in writing, your “fixed” rate could be adjusted anytime.

Issues on Fixed Rate Credit Cards

There is an ongoing thought from many people that fixed-rate credit cards will soon be gone, at least for a period of time. This was felt when a number of large banks announced that the accounts of some of their fixed-rate cardholders will be converted to a variable rate. These include Bank of America, JP Morgan Chase and Discover Financial Services. Generally, this is a tactic that banks and other financial institution use to sustain their business.

As of now, several articles related to this were published. You can read further by visiting the links below:

Fixed-Rate Credit Cards May Vanish
In June, Bank of America Corp. and J.P. Morgan Chase & Co.’s Chase Card Services notified some cardholders that their fixed rates were being converted to a variable rate tied to the prime rate. In March, Discover Financial Services also notified some customers that their fixed rates were changing to a variable one.

Say goodbye to fixed-rate credit cards, for now
Credit-card issuers increasingly are moving consumers into variable-rate cards rather than fixed-rate ones, due in part to the new credit-card law slated to go into effect in phases starting in August.

Fixed-rate credit cards going away?
Some issuers have converted a portion of their credit card fleet from fixed rates to variable rates, including Bank of America and JPMorgan Chase. Discover Financial Services changed some cards to variable rates last October and Capital One followed suit earlier this year.