Credit Card Glossary
Fixed Rate
The term fixed rate is a bit misleading because although it does not carry the risk of automatically changing each month it is only fixed for as long as a credit company wants to leave it at a particular rate. In actuality a credit card company can alter its “fixed rate†at any time.
A fixed rate is usually a couple of percentage points higher than a variable rate, but you will have the advantage of knowing what your interest rate will be. Variable rates are just that—they change—and can increase (usually the case) or decrease your finance charges. However, fixed rates are not as likely to change overnight.
The Federal Truth of Lending Act requires that you only be provided with fifteen days notice before a company can change your fixed rate. Also there is no limit to the number of times they can change your rate in one month, one year or during a lifetime of using the credit card! So be aware that a fixed rate is not a guarantee that the interest rate on your credit card will always be low.