Fixed Rate Vs. Variable Rate Credit Cards

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Although it is mostly industry practice to charge a variable rate of interest on outstanding credit balances at a certain percentage rate above Prime Lending Rate, it is possible, these days, to obtain a fixed rate credit card. So, when would you want to apply for a fixed rate credit card over a variable rate credit card?

The answer to this may not actually sound as simply as you may think. Two factor need to be borne in mind: first, what is the Prime Lending Rate at the moment; and second, what are the chances of the percentage rate plus Prime Lending Rate going above the fixed rate?

If you feel that borrowing rates are cheap at the moment and that it is unlikely that Prime Lending Rate is going to go up in the near future, then in all likelihood having the variable rate credit card is going to be more of a benefit to you than having a fixed rate credit card. However, if the opposite is true, and you believe that there is a good chance that Prime Lending Rate is going to up in the near future, there may be a very good reason for you to want to lock-in your interest rate at the current fixed rate being offered by the card provider.

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