Fixed interest rate credit cards have all but disappeared in the last few years. Variable rate credit cards have replaced them almost entirely. The variable rates will generally fluctuate over an interest rate range of 8% to 10%.
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About the only fixed interest rate credit cards left on the market are secured credit cards. These credit cards are secured by the cardholder’s own funds, which are placed on deposit at the card issuer’s bank. The amount of the security deposit, usually a minimum of $200, becomes the cardholder’s credit limit.
Secured Fixed Rate Credit Cards
A quick online search for fixed rate credit cards turns up several bankcards, all of which require that a security deposit be submitted with their application. The first is the First Progress Secured Platinum MasterCard through Synovus Bank.
The First Progress card requires a minimum security deposit of $300 with a maximum of $5000. The fixed interest rate quoted for this card is 14.99%. Cash advances will be charged at an APR of 19.99%.
First Progress reports to all three major credit bureaus each month, which will quickly help cardholders establish a credit history. The First Progress credit card is a Platinum MasterCard and comes with all of the cardholder benefits associated with a platinum level card.
Applied Bank offers two different fixed rate secured Visa credit card options. The first is their Visa Gold credit card featuring a low fixed rate of 9.99%. This rate is guaranteed not to change even if you are late with a payment. Applied bank also guarantees approval with a security deposit from $200 to $5000.
Applied Bank is one of the top 10 banks in the United States according to Weiss Ratings and the only Delaware bank to earn A+ ratings for financial strength. The second secured fixed rate credit card offered by Applied Bank is their Platinum Zero Secured Visa.
This card amazingly offers a fixed 0% annual percentage interest rate on purchases. Cash advances will be charged a 9.99% APR. There are no application fees for the Applied Bank Platinum Secured Visa and credit lines are available from $500 to $5000.
Unsecured Fixed Rate Credit Cards
At least one unsecured fixed rate credit card remains on the market. That is the Credit One Bank Platinum Visa. The card carries an interest rate of 23.90% and a maximum credit line of $1500 along with the status and benefits of Platinum Visa.
Credit One Bank requires a first year fee of $75 and a recurring annual fee of $99. While the interest rates and fees are high for this card, Credit One Bank reports to Experian, TransUnion and Equifax, providing an excellent opportunity for a consumer with poor credit to obtain an unsecured credit card and improve their credit history.
The Disappearance of Fixed Rate Credit Cards
The Credit Card Act of 2009 dramatically altered the rules for banks and credit card companies. The Act imposed new regulations limiting changes on credit card interest rates and requiring credit card issuers to provide 45 days notice of any impending changes.
Consumers who were unwilling to accept account changes and new, higher interest rates were given the right by the Credit Card Act to close their credit card accounts and pay off any outstanding balances under the terms of their original agreements.
According to the Wall Street Journal Market Watch article, “fixed means fixed!” Unless a credit card customer fails to pay his bill, the new law states that an interest rate must remain fixed for at least a year.
The majority of the nation’s largest banks including Chase, Citi and Bank of America began switching over customers’ accounts to variable interest rates early in 2009.
Tying variable credit card rates to an index like the bank prime lending rate gives banks the opportunity to increase consumer rates, as the market is likely to become more volatile in the future.
Bloomberg Businessweek also chronicled these changes in their 2009 article. Switching to variable interest rates will definitely work in the banks’ favor. While the prime lending rate has been stuck at 3.25% in recent years, it can very quickly rise, as it has done many times in the past.
Current Average Variable Interest Rates
According to the Federal Reserve, the current average credit card interest rate for purchase transactions is 12.78% as of November 2011. Existing credit card balances were being assessed an average APR of 14.67% as of February 2010.
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