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Do all credit cards have variable rates? Can I get a fixed rate? Do I want a fixed rate?

By , CardRatings contributor
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Ever since the credit crunch of 2008, the fixed-rate credit card has been on the endangered species list. Although variable-rate credit cards had already grown popular among lenders, fixed-rate credit cards offered consumers a great incentive to switch banks. If a lender got in over its head, or if a customer fell behind on their payments, the issuer would just hike the fixed rate. If a cardholder didn't like it, they could usually just pursue another bank's balance transfer offer.

Fast forward to the passage of the Credit CARD Act, and you'll see how everything changed. Consumer protections now require banks to honor the interest rate in effect when you signed up for your card. If the bank wants to change your rate, you've got time to opt out of that new deal, shut down your card and pay off your balance at your existing rate. Many lenders switched customers to variable rate credit cards before the Act took effect, linking a "spread" to the Prime Rate and guaranteeing themselves a profit margin when interest rates eventually climb.

And that's the reason you should seek out a fixed-rate, low-interest credit card if you've got a strong credit score and a large credit card balance. Today's historically low interest rates won't last forever. As the economy improves, the Prime Rate will rise. "Low" interest rates around 9 to 12 percent will adjust upward, leaving consumers who carry balances on the hook for larger finance charges.

However, fixed-rate credit cards remain nearly impossible to find, outside of neighborhood credit unions and community banks. Pentagon Federal Credit Union splits the difference with occasional promotions for new members that lock in a low, fixed interest rate for the life of a balance transfer. That may be the closest deal you can find to a true fixed-rate credit card. Regardless of whether you make a switch, use this current period of low interest rates to pay down as much of your credit card balance as you possibly can. Then, it won't really matter whether you've got a fixed or a variable rate.

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