How to Find Fixed-Rate Credit Cards

Key takeaways

  • Not like variable-rate bank cards, fixed-rate bank cards include set rates of interest that don’t change in accordance with an underlying index (just like the prime charge).
  • There are a number of circumstances the place the rate of interest of a fixed-rate card can change, together with a change in your credit score rating or a missed cost.
  • Low-interest variable-rate playing cards and bank cards that provide 0% promotional APRs will be higher options than fixed-rate playing cards in lots of circumstances.

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

However it is best to know {that a} bank card with a variable APR received’t essentially depart you on the mercy of wildly fluctuating rates of interest. Actually, in lots of circumstances you will get the steadiness you’re in search of with a variable charge card and — relying in your creditworthiness — with a decrease rate of interest than you may count on.

Let’s take a better take a look at why fixed-rate playing cards are so onerous 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 at the moment’s greatest bank cards comply with a variable charge construction, that 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 sometimes follows. In contrast, because the identify would counsel, the APR of a fixed-rate bank card isn’t mechanically affected by prime charge fluctuations.

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

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

Mounted-rate bank cards aren’t as secure as you may suppose

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

A hard and fast-rate card received’t fluctuate with the prime charge, however a change in your circumstances, similar 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 will be traced roughly to the Credit score CARD Act of 2009. This laws ushered in a variety of shopper protections, together with safety towards random charge will increase with out warning on their bank cards.

By regulation, card issuers should lock APRs for an account’s first yr (although exceptions do apply). After that, they’ve the appropriate 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 yr.

Based on Ted Rossman, senior trade analyst for, “[The Credit CARD Act] mainly made it so the best manner for card issuers to lift charges on current balances turned to tie them to an underlying index, just like the prime charge,” Rossman mentioned. “So this is the reason we see so many playing cards these days — actually, nearly all bank cards — have converted to this variable charge construction.”

Variable charges should not essentially as risky 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 try this,” mentioned Rossman. “Once they do, perhaps it goes up a quarter-point at a time.”

The most effective card for you in all probability comes with a variable APR

Earlier than figuring out whether or not or not a fixed-rate bank card is best for you, it’s price considering via what you’re hoping to get out of this sort of card. Are you on the lookout for a set charge as a result of it is advisable to pay for a big buy over time and don’t need to be derailed by rate of interest hikes whereas carrying a stability? Maybe you’re consolidating high-interest debt and need 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 might sound interesting in these circumstances, you’ll probably be higher off with a 0 p.c intro APR card that provides an prolonged time period with no curiosity expenses in any respect. So long as you’re capable of repay the stability of that new fridge or much-needed trip through 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 below are a few of the greatest 0 p.c intro APR affords presently obtainable providing promotional intervals for each purchases and stability transfers:

Card identify Intro buy supply Intro stability switch supply Common APR (variable)
Wells Fargo Replicate® Card 21 months 21 months (on stability transfers made inside 120 days of account opening) 18.24%, 24.74% or 29.99%
U.S. Financial institution Visa® Platinum Card* 18 billing cycles 18 billing cycles (on stability transfers made in first 60 days) 18.74% to 29.74%
Financial institution of America® Custom-made Money Rewards bank card 15 billing cycles 15 billing cycles (on stability transfers made in first 60 days) 18.24% to twenty-eight.24%
Wells Fargo Lively Money® Card 15 months 15 months (on stability transfers made inside 120 days of account opening) 20.24%, 25.24% or 29.99%

In the event you don’t suppose you’ll be capable of repay your stability through the promotional interval — or in the event you count on to commonly carry a smaller stability on occasion 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 affords listed earlier may supply a low ongoing APR to cardholders (once more, primarily based on creditworthiness).

Listed below are a few of the greatest playing cards with rates of interest that could be decrease than the present common charge:

Card identify Greatest for Variable APR
Improve Money Rewards Visa® Truthful credit score 14.99% to 29.99%
Uncover it® Money Again First-year rewards 17.24% to twenty-eight.24%
Citi Rewards+® Card Factors round-up function 18.74% to twenty-eight.74%
Blue Money On a regular basis® Card from American Categorical Money again for households 19.24% to 29.99%

The underside line

Whereas a fixed-rate bank card could seem to be the easiest way to manage your curiosity expenses, 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 just isn’t as necessary as merely getting the bottom rate of interest you’ll be able to, or the promotional rate of interest it is advisable to give respiratory room on paying off a stability.

If you already know you received’t be capable of pay your stability in full every month, deal with getting the bottom rate of interest you’ll be able to, 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 Platinum Visa Card has been collected independently by Bankrate. Card particulars haven’t been reviewed or authorised by the cardboard issuer.
Financial institution of America® Custom-made Money Rewards bank card data was final up to date on January 18, 2024. Citi is an promoting companion.

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