How to Find a Fixed Rate Credit Card
When it comes to credit card interest rates, there are two general types of cards — variable rate and fixed rate. Most cards today fall into the first category, but there are still a few fixed rate cards around. We’ll break down what the difference is and where you can find a fixed rate card.
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What are fixed rate credit cards?
Most credit cards today are variable rate cards, which means their APR (annual percentage rate) is tied to an index such as the prime rate. Should the index increase or decrease, so too will the APR on these cards. Prior to the Credit CARD Act of 2009, fixed rate cards were more prevalent, but banks shifted to variable rate cards as their ability to change terms became more limited due to provisions in the Act.
A fixed rate credit card is not tied to the prime rate or any other index. For this reason, you can generally expect a less volatile APR on a fixed rate card than on a variable rate card.
“Having the ability to lock in a set interest rate typically gives people better predictability, a higher level of security [from knowing what to expect],” said Lynnette Khalfani-Cox, a personal finance expert and author known as “The Money Coach.”
That doesn’t mean your APR is guaranteed to stay the same forever, though.
Can the APR on a fixed rate card increase?
In a word, yes.
“To some extent, there’s kind of no such thing as a totally fixed credit card interest rate,” Khalfani-Cox said. That’s because issuers retain the right to change card terms, as long as cardholders are given sufficient notice.
By law, card issuers must give cardholders 45 days’ notice before changing interest rates. In contrast, when the Federal Reserve raises or lowers interest rates (the Fed doesn’t control the prime rate, but the prime rate does fluctuate based on the Fed’s actions), variable rate card APRs will rise or fall accordingly, without the required notice to cardholders.
Where to find a fixed rate card
Your best chance of finding a fixed rate card these days is with a credit union.
“Fixed rate cards absolutely are rare — partly because of changes brought by the CARD Act of 2009,” said Matt Schulz, chief industry analyst at LendingTree.
Here are a few fixed rate cards you might be able to apply for:
- The UNIFY Fixed-Rate Visa® Platinum (9.49% - 17.99% fixed APR). There’s also a variable APR version, the UNIFY Variable-Rate Visa® Platinum (14.00% to 22.00% variable variable APR).
- The UNIFY Fixed-Rate Visa® Gold (9.49% - 17.99% fixed APR). There’s also a variable APR version, the UNIFY Variable-Rate Visa® Gold 11.49% to 17.99% variable APR).
- The UNIFY Fixed-Rate Visa® Classic (9.49% - 17.99% fixed APR). There’s also a variable APR version, the UNIFY Variable-Rate Visa® Classic (11.74% to 17.99% variable APR).
- The Cencap Visa Credit Card (9.90% fixed APR).
- The Qside MasterCard Classic Credit Card (12.90% fixed APR).
- The Qside MasterCard Platinum Credit Card (8.90% fixed APR).
- The Qside MasterCard Platinum Rewards Credit Card (9.90% fixed APR).
- The Excent™ Card (13.99% fixed APR).
Note that credit unions often have membership eligibility requirements, which may restrict your ability to apply for a card. For example, there are four ways to become a member of Qside Federal Credit Union, which is based in New York City:
- If you live, work, worship or study in the Queens area.
- If you have an immediate family member who is already a Qside member.
- If you work for one of Qside’s Select Employer Groups.
- If you qualify for another membership opportunity (such as working for Qside).
Some credit unions may offer ways to join even if you don’t qualify for membership based on where you live or work. For instance, UNIFY Financial Credit Union will let you apply by joining one of their affiliate partners — the Surfrider Foundation and Friends of Hobbs.
Why you may be better off with a variable rate card
If you want to lock in a low ongoing APR, a fixed rate card might be your best bet — but in other situations, you might want to consider a variable rate card instead. Here are a few scenarios:
You need an intro 0% APR offer. If you need to do a balance transfer or are planning a big purchase, a card with a 0% introductory APR could save you money on interest charges for a specific amount of time. Many of the cards with great introductory 0% APR offers, such as the Wells Fargo Platinum card and the Capital One Quicksilver Cash Rewards Credit Card are variable APR cards. However, the variable rate APRs don’t kick in until after the 0% promotion ends.
You want rewards and perks. There are a broad array of credit cards offering cash back, travel miles and rewards points. Most of these are variable rate cards. However, if you pay off your balance to $0 every month, you won’t have to worry about interest charges and can actually put some cash back in your pocket or use miles or points to offset travel costs.
You want a big sign-up bonus. If you’re looking to earn a generous sign-up bonus based on your initial spending on a new card, you’ll probably need to look at variable APR cards such as the Chase Sapphire Preferred® Card or the Capital One Venture Rewards Credit Card.
To get your best value from a variable APR card (or any credit card), you should only charge to it what you can pay off at the end of each month — or in the case of a introductory 0% APR offer, what you can realistically pay off before the intro period expires. If you carry a balance, you may end up paying more in interest charges than you earn in rewards.
How to avoid interest charges altogether
The easiest way to avoid accruing interest charges is to avoid carrying a balance. If you can, make it a point to charge only what you know you can pay off at the end of each month.
Whatever you do, don’t fall behind on your credit card payments. With many cards, a late payment will trigger a penalty APR that’s much higher than your regular ongoing APR.
If you know you’re going to have to carry a balance, or if you got stuck carrying a balance at some point in the past, a 0% intro APR offer might be a way to pay down your debt and save on interest charges. Take a look at our list of cards offering a 0% intro APR on purchases and balance transfers. Just remember — it’s important to pay off your balance before the intro period expires.
Read: Understanding the Different Types of APRs
The bottom line
We never recommend carrying a balance. But if you do carry a balance, a fixed rate credit card might be a way to keep interest charges relatively low. Issuers can still change the APR on a fixed rate card, but it won’t fluctuate with the prime rate like a variable rate card is likely to do. However, fixed rate cards are hard to find. Credit unions are more likely than large banks to offer fixed-rate credit cards these days.
For Capital One products listed on this page, some of the above benefits are provided by Visa® or Mastercard® and may vary by product. See the respective Guide to Benefits for details, as terms and exclusions apply.
The information related to the Wells Fargo Platinum card has been independently collected by LendingTree and has not been reviewed or provided by the issuer of this card prior to publication. This offer and/or promotion may have since changed, expired, or is no longer available.
The information related to the Chase Sapphire Preferred® Card has been collected by LendingTree and has not been reviewed or provided by the issuer of this card prior to publication. Terms apply.