(c) Copyright Resume Corner, Inc. DontSpendMore.com. All rights reserved.
Pros and Cons of Having a Fixed Interest Rate Credit Card
Interest is basically a percentage of money borrowed that is paid to the lender for the privilege of borrowing the money. While there are all different kinds of interest rates offered on different credit cards, a fixed interest rate credit card can be both a blessing and a curse for consumers, so it’s important to know how the lender defines fixed and how the rate can be modified.Get a great credit card with 0% interest at DontSpendMore.com
Click here to compare and save on credit cards. Low APR and 0% APR credit card offers from multiple providers. Click here to save now. |
Are Fixed Rates Actually Fixed?
This is perhaps the most important question a borrower should ask when thinking about getting a fixed interest rate credit card. It is very common for fixed interest rate cards to actually be set at a fixed rate for a specific period of time, generally a few months to at maximum a year. There may be cards that offer a fixed rate for the lifetime of the card, but these are extremely rare. So, a fixed rate is typically fixed for a period of time. After that time, cards typically adjust the rate to a new fixed rate, or, more often, switch to variable rates.
However, there’s no guarantee that a fixed interest rate card will stay fixed during the promised time period as lenders can change the rate after giving borrowers 30 days notice, and most cardholder agreements state that rates can immediately be increased if a payment is late.
* This online application is subject to the terms and conditions as described in the Important Information Section of the application. |
||||||||||||||||||||||||||||||||||||||||||||||||
Don’t be confused, the fixed rate can actually change and it’s not set in stone.
Pros of a Fixed Interest Rate Credit Card
There are many pros to having a fixed interest rate credit card for consumers. First among these is that the interest rate is much less likely to shift unexpectedly and cause higher credit card payments and larger amounts of debt. This is good for consumers. In addition, with fixed rates, consumers can predict and plan for their payments in the budget instead of having to work with a constantly changing payment amount. This can offer consumers a sense of security for the period of time when the interest rate is fixed.
Cons of a Fixed Interest Rate Credit Card
There are several disadvantages to having a fixed rate card, with the main one being that because of the risk to the lender, fixed rates are usually higher than the rates offered on variable rate cards. The other main disadvantage of this type of card is that consumers can get quite a shock when the fixed period ends and the interest rate adjusts up considerably which is typically the case.
It can have a severe negative impact on the consumer’s budget, so borrowers should carefully plan ahead for when a fixed interest rate credit card period will expire and plan accordingly.
Having a predictable credit card payment is one of the main benefits of having a fixed interest rate credit card. It allows for easy budgeting and planning. However, consumers should be careful to ensure all payments are made on time so as not to end the fixed rate period early. And finally, borrowers should plan ahead for when the fixed rate will end so to have the budget available to continue to make payments.
| Thank you for visiting us. Do consider visiting DontSpendMore.com to compare and save on credit cards, cell phones, loans, long distance, mortgages, Internet access, and more. |
Click here to find out how to save money on credit cards
Compare and save on credit cards, cell phone, long distance, Internet access, mortgages, insurance, and more at www.dontspendmore.com
Home Contact Us Partners Tell A Friend Privacy Policy About Us Terms of Service