Credit Tips: Searching for Credit Card with Guaranteed APR

Posted On: February 5, 2005

Author: Mike.Main
Joined: 24 Jan 2005
Posts: 5
Location: Arizona
Posted: Sat Feb 05, 2005 5:08 pm
Post subject: Is there a card with guaranteed APR?

In other words, is there a credit card that has a fixed APR regardless of your payment history or any other factor that can be used to jack up your interest rate?

T.I.A

Mike Main

View our latest credit card ratings!

Author: mouse
SENIOR MEMBER (Member for 2 yrs.+)
Joined: 29 Jul 2004
Posts: 155
Posted: Sat Feb 05, 2005 6:29 pm
Post subject: Re: Is there a card with guaranteed APR?

Mike.Main wrote:
In other words, is there a credit card that has a fixed APR regardless of your payment history or any other factor that can be used to jack up your interest rate?

T.I.A

Mike Main

FIXED is only till they notify you before they raise it

They only need to give you like 20 days advance notice before they raise it

View our latest credit card ratings!

Author: Board Monitor
Board Monitor/ Administrator
Joined: 05 May 2003
Posts: 545
Posted: Sun Feb 06, 2005 11:21 am

Mike.Main,

Thanks for your post and welcome to the board! I don’t think such an animal exists on our entire solar system. The only advantage of a “fixed” rate card is that the rate usually does not change as frequently as a variable rate card.

Out of curiosity, how did you find out about our site?

Best Regards,
Curtis Arnold
Board Monitor
U.S. Citizens for Fair Credit Card Terms, Inc.
http://www.cardratings.com
501-663-0314 PH
501-301-8474 FX

View our latest credit card ratings!

Author: NightStar
Board Monitor
Joined: 07 Nov 2003
Posts: 2556
Location: Illinois
Posted: Sun Feb 06, 2005 3:34 pm

I think it is shameful how misleading that term is, people think that the rates can not be changed

I think fixed means that during the month when varitable cards would fluctuate on the APR theirs does not.

The creditors are going by the wall street journal to determine what APR they should be charging, and depending, that can fluctuate daily, monthly, maybe even quarterly.

Know when you hear them say that is 4% + Prime = 7% or something like that, I think what they are doing is following the up and down on the Prime. Maybe it is the other way around, but one of them two can either fluctuate on a regular basis, or have a set standard for a longer period of time.

It has nothing to do with defaulting on the account, that is always a given that they can rake you over the coals if you miss a payment or go over the credit limit, or for that matter carry too high of balances… heck they can even change their mind without credit ever being an issue… just because they wanted to change things.

I know I am so close on this, but I don’t think I remember it quite right. Maybe one of the guys can explain it better then me.

Best Regards,
Pammila Phillis
Board Monitor
U.S. Citizens for Fair Credit Card Terms, Inc.
http://www.cardratings.com
501-663-0314 PH
501-663-0033 FX

View our latest credit card ratings!

Author: Ira
SENIOR MEMBER (Member for 2 yrs.+)
Joined: 19 May 2003
Posts: 827
Location: NJ
Posted: Sun Feb 06, 2005 6:02 pm

Here’s an explanation of how a “fixed” rate can change due to default. I’m copying this from a 0% balance transfer offer (which I will discuss further in a separate thread) I just received one one of my JPMorgan-Chase cards:

Quote:
DEFAULT: Any introductory, promotional, or standard APRs are contingent on your complying with the terms of your account. For example, if your payment on any account or loan to us is not received by the date and time your payment is due; if your account is overlimit; if a payment to us is not honored by your bank or if you pay another creditor late, the introductory, promotional, or standard APR may end and the APRs on all balances on your account will adjust to the applicable rate and become effective as determined by your Cardmember Agreement and any subsequent notices of changes to your account terms.

Do not let what you cannot do interfere with what you can do.

Ira

View our latest credit card ratings!

Author: Polonius
Credit Expert (100+ Posts)
Joined: 19 Jan 2004
Posts: 476
Posted: Sun Feb 06, 2005 7:32 pm

For rates tied to the prime rate, this info is useful:
Quote:
The prime rate is defined by The Wall Street Journal (WSJ) as “The base rate on corporate loans posted by at least 75% of the nation’s 30 largest banks.” It is not the ‘best’ rate offered by banks.

HSH uses the print edition of the WSJ as the official source of the prime rate. Many (if not most) lenders specify this as their source of this index.

The prime rate does not change at regular intervals. It changes only when the nation’s “largest banks” decide on the need to raise, or lower, their “base rate.” The prime rate may not change for years, but it has also changed several times in a single year.

That’s from
http://www.hsh.com/indices/prime00s.html
The same page has a list of prime rate changes from the year 2000 to present, with links to lists going back to 1975. Here’s the most recent changes:
27-Jun-03 4.00%

01-Jul-04 4.25%
11-Aug-04 4.50%
22-Sep-04 4.75%
10-Nov-04 5.00%
14-Dec-04 5.25%

02-Feb-05 5.50%

After the rate changes, your bank will typically change what it charges with your next billing cycle IF your rate is specified as based on the prime rate plus or minus a percentage.

And note that when a bank tells you its rate has to jump because of “rising interest rates” that the prime itself has only rising 1.5 percentage points in the last two years. Banks don’t pay prime rate for their loan money–that’s the rate the banks lend money to their best customers. Banks get money from all sorts of sources (savings accounts, CDs, etc.). When necessary, banks CAN borrow from the discount window of the Federal Reserve. Recently those rates were:
01/09/03 to 06/25/03 2.25
06/26/03 to 06/29/04 2.0
06/30/04 to 08/09/04 2.25
08/10/04 to 09/20/04 2.50
09/21/04 to 11/09/04 2.75
11/10/04 to 12/13/04 3.00
12/14/04 to 2/1/05 3.25
2/2/05 to present 3.50
Source:
http://minneapolisfed.org/research/data/us/disc.cfm

So AT WORST your bank is paying 3.5% interest on the money it is loaning to you. Tell me how the banks justify charging 10%, 20%, even 30% to good customers. No wonder there’s all that marble in those lobbies!

Polonius
“Neither a borrower, nor a lender be; For loan oft loses both itself and friend”

View our latest credit card ratings!

Author: NightStar
Board Monitor
Joined: 07 Nov 2003
Posts: 2556
Location: Illinois
Posted: Sun Feb 06, 2005 8:50 pm

Yea, even when consumers default, they have already made so much profit on interest rates and late fees, over the limit fees and such prior to that, then in a addition they get write off tax breaks…

Then they justify raising rates, for the slightest reason.

Best Regards,
Pammila Phillis
Board Monitor
U.S. Citizens for Fair Credit Card Terms, Inc.
http://www.cardratings.com
501-663-0314 PH
501-663-0033 FX

View our latest credit card ratings!

Author: DHK
Joined: 20 Dec 2004
Posts: 23
Posted: Mon Feb 07, 2005 2:24 am

Credit Union cards are the CLOSEST you’ll find to what you’re looking for.

They DON’T pull your credit every month (so no benefits of the AR either).

If you want an CLI, you must authorize a HARD.

Rates are generally low - as low as 9.9% (some lower, check around).

Because they don’t pull your report after the CL is granted, they don’t know your payment history with other lenders and WON’T jack your rate.

Now, if you’re late for 2 consecutive payments, then the rates will go up to a still conservative 16.9%.

BTW, I’m using the DCU Visa as a model for this example. They offer a fixed rate card product. Most CU who issue their own cards use similar card offerings. http://www.dcu.org

View our latest credit card ratings!

Author: credithelp
Joined: 23 Aug 2004
Posts: 68
Posted: Mon Feb 07, 2005 9:56 am

credit unions generally treat people much better. the rates only change when absolutely necessary, the fees are less, and they dont hold the payments an extra day or two to make someone late.

The biggest plus is that they dont have shareholders expecting the largest profits possible.

View our latest credit card ratings!

Author: NightStar
Board Monitor
Joined: 07 Nov 2003
Posts: 2556
Location: Illinois
Posted: Mon Feb 07, 2005 5:56 pm

Quote:
What is a Variable Rate?

A variable rate is a rate that can change because it is based on an Index. For each billing cycle the Index is determined in the month prior to the month in which the billing cycle ends. In that prior month, the highest Prime Rate published in The Wall Street Journal is selected (the “Index”). If the Index has changes, the new variable rate will take effect with the billing cycle that ends on or after the first day of the month following the Index change. For example, if the Prime Rate used to determine the Annual Percentage Rate was 9%, which if added to a Spread of 9.99%, would result in a variable Annual Percentage Rate of 18.99%. (Sum of the Prime Rate and the Spread.)

There we go, that was what I was looking for, explaining variable rate, now fixed rate is when the APR (spread and prime) are not based off of the index changes each month.

I had one account that was fixed through National City, it was 9.9% fixed, meaning there was no alteration month to month when the wall street journal reported changes to prime. It would remain 9.9% interest as long as I paid as agreed, and as long as they continued with that program.

APR is the estimate of what in a years time is figured to be charged against the account, but it actually fluctuates from month to month, or so when the index changes.

It can be confusing, since there are a few different meanings to some of the terms used.

There might be more that I am over looking though, just the side that I had been explained on once and recalled.

Best Regards,
Pammila Phillis
Board Monitor
U.S. Citizens for Fair Credit Card Terms, Inc.
http://www.cardratings.com
501-663-0314 PH
501-663-0033 FX

View our latest credit card ratings!