Low fixed rate credit cardsNo one likes paying more in credit card interest than they have to - heck, nobody likes paying credit card interest at all. With more and more people now using their cards for things like fast-food meals and gasoline, we all need to shop carefully for the best rate - unless we can be 100% certain of paying our entire balance off at the end of each month. Several credit cards companies do offer low fixed rate cards that, in most cases, do not change APRs unless your payment history changes. However, there may be big differences in fees and other terms of service, so it pays to shop around. The current credit crunch and US recession add to the pressure, but that is all the more reason to make sure you get the best deal you can. Adjustable rate cards may appear to be cheaper, especialy if there are no annual fees and they boast about 0% APR introductory "honeymoons". However, all these cards eventually revert to their market rate, which is tied to specific market economic indicators, most often the prime rate that banks pay to borrow money from the Federal Reserve. Lenders typically tie the interest rates charged on their cards to a floor rate added to the prime rate to determine a minimum interest for their cards. While there may appear to be a significant savings over low fixed rate credit cards, this is illusory as the introductory offer will eventually be replaced with at least the standard rate - and if the Fed's prime rate moves upwards, the card interest goes right up with it. (At the moment consumers are rightly confused and angry about why this never seems to work in reverse - the Fed's rate cuts are NOT routinely passed on by card issuers.) Even some of the low fixed rate credit cards are subject to change based on a variety of factors such as payment history or the lender simply choosing to increase the rate. Usually the interest rate can be adjusted at any time with 30-day written notice. This can be a trap for consumers as such conditions are often buried in the fine print or are announced on a glossy insert that looks just like junk advertising arriving with the monthly bill. These notices are easily overlooked by consumers and they find that their low fixed rate credit cards have suddenly been adjusted to a higher interest rate than they were expecting. This is where it pays to know something about the history and reputation of the lender.
When looking at the difference between adjustable and low fixed rate credit cards, it is important to look at all of the variables in credit agreements for both. Annual fees, mostly a thing of the past for credit cards, as well as late payment fees and over the limit fees, can sometimes undermine the benefits of fixed rate cards. You must sit down and do the math. As you can see from the example payments provided for the Pulaski Bank Credit Card, even if you have another card with an interest ate as low as 12%, the Pulaski card is STILL CHEAPER, EVEN WITH THE FEE! So make sure you know what the annual fee will be and take it into account, but do your calculations in a conservative and realistic way that takes into consideration what will happen if you have to carry a monthly balance for a while. The low rate Pulaski card will always come out ahead in this scenario. On the downside, application processing can be slow. Even though it is possible to apply online for Pulaski fixed rate credit cards, due to an overwhelming demand for the low fixed rate, it could take up to 30 days to process your application. They also tend to ask for more information than other card issuers. Their very low rates mean Pulaski must be more diligent about the credit approval process. However, applicants with a good credit record should not have difficulty meeting credit requirements. This is a neat little article about other
low fixed rate cards,
for example the excellent Simmons Bank, and the hard to get but great value Capital One Platinum Prestige - be warned - it requires perfect credit.
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