Fixed Rate Credit Card – Do They Really Exist?
Your credit card’s fixed rate is fixed only until your card issuer decides to increase it. This makes a fixed rate credit card the Loch Ness in the world of credit cards. Issuers claim it exists, but consumers are yet to actually see it.
So why do they call it fixed rate? When compared to variable rate cards, a fixed rate credit card has at least a semblance of “fixedness” in the rise and fall (perhaps just “rise” if we are to be realistic) of its interest rate. The rates of variable cards fluctuate with the prime rate index; when the index increases, credit card rates simultaneously increase with or without the knowledge of the consumers. Unlike variable rates, issuers of fixed rate cards cannot change interest rates without informing the consumer at least 15 days in advance – soon to be at least 60 days when the new credit card law goes into effect.
This means that fixed rate cards are not really fixed. It’s just that consumers will be informed of any changes that may later be imposed by issuers. Consumers are only entitled to be notified and can’t take actions to prevent it. The only consolation is that, at least you’ll know when it’s time to ditch your credit card and shop for a better deal.
There are speculations that fixed rate credit cards will fly out the window when the new credit card law is in effect. This new law imposes more stringent parameters before a card issuer can impose changes on the interest rate, such as, for example, the 60 day notice period and the one year restriction rule (no increases within the first one year from the opening of the account).
These conditions are obviously burdensome to card issuers. Most of them are expected to do away with fixed rate cards and convert these accounts to variable rates. However, by law of competition, there is bound to be an odd one out. When the new law is in effect, look for these maverick issuers and you just might bag the best credit card deal by choosing their fixed rate credit card.
