Fixed Rate Credit Cards

By: Anne Durrell

Fixed rate credit cards can offer people some peace of mind when it comes to trying to keep your spending patterns predictable. After all, if you know you're going to be paying a fixed rate on credit cards then the repayments can't fluctuate as much as they would with a variable rate.

Before you apply for fixed rate credit cards, there are some things you should think about:

1. If you're the type of person who pays off your balance every month and doesn't carry any credit card debt, then the APR won't affect you at all. After all, you're not paying any interest anyway, so perhaps opt for a rewards visa card to benefit from your discipline.

2. If you're the type of person who carries a balance and can't pay the amount off completely, then it's important to consider the interest rates carefully.

Fixed rate credit cards frequently charge a rate that is a little higher than the variable rate, but you do have the reassurance of knowing that your rates can't fluctuate as frequently as a variable rate will.

While there are several low fixed rate credit cards advertised, it's important to remember that banks and lenders tend to reserve the best rates for customers with excellent credit. If your credit is a little less than excellent, then always shop carefully as you could find yourself paying far more in interest than you need to. You may also find that you'll have to pay an annual fee on your account too.

Another point to watch for is how long the fixed rate credit card period will last. Some lenders only offer the advertised fixed rates for a short period of time, after which your APR will revert automatically back to a variable rate without warning. Always check how long your fixed rate will run.

While fixed rate credit cards might seem like a good idea, consider what's happening in the market with other financial products, like mortgages or personal loans. If you see that the general market interest rates look like they're falling, then perhaps opt for a variable rate so you can benefit from the falling rates too.

However, if you believe the interest rates might be climbing again then a fixed rate credit card might be a better option, as you'll avoid being stung by rising rate costs.

Even though you might believe you've applied for a fixed rate credit card and you believe that the rate can't change, you'll find in the small print that your lender still has the right to change your interest rate with two weeks notice. This means that the safety net you thought you had could still end up charging higher interest than you expected.

Fixed Rate Credit Cards

lowest fixed rate credit cards

Fixed Rate Credit Cards

Related Articles: