When you are looking for a credit card, you will look at both those with variable rates and those with fixed rates. The prime lending rate is used as a benchmark for a credit card with a variable rate. Then, each lender adds his own interest percentage and gives the credit card with a variable rate to his customer. Think about it this way: whenever the Federal Reserve raises its interest rates, bank rates also go up.
When the prime lending rate keeps going down, that's the best time to get a credit card with variable rates. Then, a credit card with a variable interest rate is a good choice because you can take advantage of the low interest rates.
But don't mix up the interest rate on a credit card with a variable rate with an introductory offer. These deals are only meant to get you interested, and they end after a certain amount of time, like two or four months. After this, the interest rate on your credit card with a variable rate will go up. So, don't let these special offers influence your choice of a credit card with a variable interest rate.
There are a number of things that could change the interest rate on your credit card.
When you apply for a credit card with variable rates, your personal credit score and rating as well as your current income will affect the lender's decision. So, you can look at "standard" cards, "silver" cards, "gold" cards, "platinum" cards, and "titanium" cards. From "standard" to "titanium," the cards get better. Since interest rates are highest for standard cards and lowest for titanium cards, your ability to get any of these cards depends on how good your credit history is.
The interest rate on a credit card with a variable rate is likely to change from time to time. Some credit card companies can tell you how likely it is that the interest rates will go up or down, which can help you decide which variable-rate credit card to get. If this change still works out better for you than a fixed rate credit card, you might want to get a credit card with a variable rate.
Interest rates can change for any credit card. Since variable rate credit card interest rates are based on the current market rates, you have to keep an eye on them to see if they are a good choice for you. If they aren't, you may want to look for another variable rate credit card where the issuer gives you a better deal. Out there, the market is very crowded.
