How to Find Fixed-Rate Credit Cards

Almost all bank cards include variable rates of interest today. In the event you’re seeking to discover a fixed-rate bank card, you’ve doubtless seen the overwhelming majority of card issuers merely don’t supply them. That’s largely as a result of issuers don’t wish to be locked in when the Federal Reserve raises rates of interest.

However you must know {that a} bank card with a variable APR received’t essentially depart you on the mercy of wildly fluctuating rates of interest. The truth is, in lots of instances you will get the steadiness you’re searching for with a variable charge card. Relying in your creditworthiness, it’s possible you’ll even get a decrease rate of interest than you would possibly count on.

Let’s take a better have a look at why fixed-rate playing cards are so laborious to search out and the way you may very well be higher served by a variable APR card.

What’s a fixed-rate bank card?

Most of as we speak’s finest bank cards observe a variable charge construction, which means that their APR is tied to an underlying index just like the prime charge. Because the index charge rises and falls, the APR on variable charge playing cards usually follows. In contrast, because the title would recommend, the APR of a fixed-rate bank card isn’t robotically affected by prime charge fluctuations.

Like their variable-rate counterparts, fixed-rate bank cards could be supplied as unsecured playing cards or on a secured foundation (which means that cardholders should deposit the quantity of their credit score line to function collateral). Fastened-rate playing cards can supply rewards and should include an annual payment, although particular choices range by issuer.

Fastened-rate bank card gives are uncommon. Whereas there are some nationwide choices, you’ll usually discover them at your native financial institution or credit score union. Fastened-rate playing cards supplied by native credit score unions could also be topic to the group’s membership necessities, which means that some shoppers could not qualify for these playing cards.

Fastened-rate bank cards aren’t as secure as you would possibly suppose

It’s necessary to grasp {that a} fixed-rate bank card doesn’t imply you’ll have the identical rate of interest ceaselessly. Card issuers can — and do — elevate your rate of interest even with a fixed-rate card.

A set-rate card received’t fluctuate with the prime charge, however a change in your circumstances, akin to a drop in your credit score rating or missed or late funds, could immediate your issuer to lift your rate of interest.

The digital disappearance of fixed-rate playing cards could be traced kind of to the Credit score CARD Act of 2009. This laws ushered in various shopper protections, together with safety in opposition to random charge will increase with out warning on their bank cards.

By regulation, card issuers should lock APRs for an account’s first 12 months (although exceptions do apply). After that, they’ve the correct to alter rates of interest and different card phrases so long as they supply cardholders with 45 days’ written discover beforehand. So long as these necessities are adopted, an issuer can determine to alter your rate of interest on a fixed-rate card at any time after your first 12 months.

In line with Ted Rossman, senior business analyst for Bankrate.com, “[The Credit CARD Act] principally made it so the best method for card issuers to lift charges on present balances turned to tie them to an underlying index, just like the prime charge,” Rossman stated. “So because of this we see so many playing cards these days — actually, nearly all bank cards — have converted to this variable charge construction.”

Variable charges will not be essentially as unstable as they may appear. “Even when and when the Fed raises rates of interest, what we’ve seen within the latest previous is that they’ve been reluctant to do this,” stated Rossman. “After they do, possibly it goes up a quarter-point at a time.”

One of the best card for you most likely comes with a variable APR

Earlier than figuring out whether or not a fixed-rate bank card is best for you, it’s price considering by way of what you’re hoping to get out of one of these card. Are you searching for a set charge as a result of you could pay for a big buy over time and don’t wish to be derailed by rate of interest hikes whereas carrying a steadiness? Maybe you’re consolidating high-interest debt and desire a card with a assured decrease rate of interest to keep away from surprises as you’re employed to pay it off?

Whereas a fixed-rate card may appear interesting in these instances, you’ll doubtless be higher off with a 0 p.c intro APR card that provides an prolonged time period with no curiosity prices in any respect. So long as you’re capable of repay the steadiness of that new fridge or much-needed trip throughout the introductory APR interval, you’ll come out forward in comparison with a card that’s charging curiosity, no matter whether or not it’s a set or variable charge.

Listed here are a few of the finest 0 p.c intro APR gives which can be presently accessible — all of which include promotional intervals for each purchases and steadiness transfers:

In the event you don’t suppose you’ll be capable of repay your steadiness throughout the promotional interval, or when you count on to commonly carry a smaller steadiness occasionally and want a longer-term choice, you may also contemplate a low-interest bank card.

These playing cards will cost curiosity from day one however could supply a decrease variable charge than different card choices, relying in your creditworthiness. It’s price noting that a few of the playing cards with wonderful intro APR gives listed earlier may additionally supply a low ongoing APR to cardholders (once more, primarily based on creditworthiness).

Listed here are a few of the finest playing cards with rates of interest which may be decrease than the present common charge:

The underside line

Whereas a fixed-rate bank card could seem to be one of the best ways to regulate your curiosity prices, there are normally higher methods to pay much less curiosity which can be significantly simpler to search out. Whether or not your bank card has a set charge or variable charge isn’t as necessary as getting both the bottom rate of interest you may or the promotional rate of interest you could give respiratory room on paying off a steadiness.

If you realize you received’t be capable of pay your steadiness in full every month, deal with getting the bottom rate of interest you may — whether or not that’s a card with a 0 p.c introductory interval or a bank card with an ongoing low APR.

*Issuer-required disclosure statements
Details about U.S. Financial institution Visa Platinum Card has been collected independently by Bankrate. Card particulars haven’t been reviewed or accredited by the cardboard issuer.Financial institution of America® Custom-made Money Rewards bank card info was final up to date on Aug. 10, 2024.