Banking & Credit Cards

The banks or the companies which issue credit card always highlight their low or zero percent APR introductory rates and other lucrative features, which are enough to attract the service seekers. But what the service providers forget to mention or better to say deliberately avoid is what will be the interest rate after six or 12 months, which is popularly called ‘go to rate’.

The go to rate invariably differs from the introductory interest rates with most of the credit cards. This changed interest rate depends more on your credit history and how regularly you pay off your debts. Generally it has been seen that banks and other service providers make their lowest rate offers to those privileged clients with the best credit history.

If we compare credit cards on their interest rates, we will discover two types of credit cards. Variable interest rates credit cards and fixed interest credit cards. Variable interest rates credit cards is considered to be much consumer friendly only if the prime rate is falling but the service provider places a ‘floor rate in the agreements to maximize their profit margins. The rate floats upward when the prime rate rises.

On the contrary, fixed rate credit card offers a fixed interest rate. These cards are often stuck at a fixed interest of 9.9 percent APR after the introductory period. Even though the fixed rate credit card sounds a little more appealing at the first look, but these cards have definitely a drawback that banks often change their fixed rate credit card rates by providing a 15-days written notice, attached in the monthly billing statement.

To sum up, fixed and variable have little difference, when it comes to the credit card interest rates, as banks can change the fixed interest rates of their credit card with a few days’ notice. One advantage of fixed rate credit card over variable rate credit card is that, the variable credit card holders sometimes remain completely unaware of when and how the variations in interest rates take place.