There are so many different kinds of credit cards that it can be hard to choose the best one. The fixed-rate credit card, on the other hand, is very popular. Fixed-rate credit cards give you the peace of mind that your APR will stay the same for a certain amount of time, along with all the other benefits of a normal card. This article can help you learn more about credit cards with fixed rates.
What does the word "fixed" mean?
A credit card with a fixed rate has an APR that won't change for a certain amount of time. Most cards with a fixed rate have an APR that stays the same for 3 to 5 years. This means that during this time, your interest payments will stay the same.
Why get a card with a fixed rate?
If you have a fixed income and can't pay for your payments to go up, you should get a fixed rate card. You can figure out what the charges will be over the next few months and years even before you spend any credit. This will help you make a better budget and know exactly how much you'll have to pay each month. A fixed rate card is a good idea if you want to know that your payments won't change.
How much is it going to cost?
Even though fixed rate cards are not expensive, their interest rates are usually higher than those of variable rate cards. By giving out fixed-rate cards, the lender is taking a risk, because the base interest rate could go up and they could lose money. This is why fixed rate cards usually have interest rates that are 2-3 percent higher than regular cards.
Not every problem was fixed
Even though your APR won't change for a few years, it's important to remember that there are other costs that come with credit card billing. Even if the lender can't change the APR, they can always change the fees for late payments or balance transfers. If interest rates go up, your fees might go up too, leaving you with a card that doesn't help you.
Variable rate cards
Variable rate cards are an alternative to fixed rate cards. The APR on these cards can change, usually in sync with changes in the base interest rate. Even though it's less likely that a card issuer will lower your interest rate if rates go down, they do have to stay competitive, so it could happen. More likely, though, is that your rates will go up every year.
Is the answer a fixed card?
Fixed cards have the benefit of keeping your payments at the same rate over time, but they also have higher interest, so unless you really need to keep the interest fixed for budgeting reasons, you should stick with a lower APR card and switch cards if the rate goes up too much.
