Fixed Rate Credit Cards
Despite the ever-changing offers that you see on TV or in the press
referring to low introductory offers on credit cards it is well
worth taking a good look at fixed-rate credit cards. It may be the
case that they are a couple of percentage points higher than your
variable rate credit cards, but they do come with the added advantage
of being able to know exactly what your interest rate is going to
be, thus being able to plan more accurately for the cost of spending
on your credit card. Variable rates are just that - they change
- and can increase (often the case) or decrease your finance charges.
If you are the holder of a fixed rate credit card, the Truth in
Lending Act requires that your lender provide at least 15 days notice
to you in writing before raising the rate. In some states, there
are laws that require even more notice than this.
Some financial analysts will argue that because the rate of a fixed
rate credit card can be increased with only a 15-day notice, this
plan is not that different from a variable-rate plan, which is subject
to change at any time. They advise (as we do) looking closely at
both credit cards. If you do choose a variable-rate credit card,
check to see if there are caps on how high or how low your interest
rate can go. If the lowest variable rate possible on your card,
for example, is 15.9 percent, and rates are trending downward, you
may want to switch your card to another lender.
Experts would find it very hard to argue with the fact that a low
interest rate is a good thing. With a fixed rate credit card a low
interest rate is what you are likely to get, as you would not be
likely to take on a fixed rate credit card if its interest rate
were much higher than other credit cards on the market. But unlike
the customers of the other credit cards, with there introductorily
offers and limited period offers, you know what your percentage
rate is going to be on your interest for the foreseeable future.
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