One of the first things you should always look out for in a credit card is the low APR and the low annual fees. Now, it is evident that you can't have the best of both worlds thus you'll just have to do with a balance between the two. You can either pay high annual fees year in and year out but save up on interest rates, or you can save on the fees but risk being charged a higher interest. Apparently, the best way out of this is just to clear your outstanding balances each month. However, many of us are not masters of our finances. Lucky for us though, there exists another way to get around the system and that is to obtain cards with variable rates.
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Unlike fixed rate credit cards, variable rate credit cards impose APR that fluctuate according to indices such as the Prime rate. The prime rate is dependent on the amount of money that can be borrowed by banks in the United States from the Federal Reserve. Cuts made to these reserves will bring down the rate and thereby affecting the interest rate they charge upon your card. However, great care is taken against the rates falling too low and making the company suffer major losses. Thus, there is usually a floor-rate implemented on these cards. Unfortunately, when prime rates escalate, there are no ceiling-rates to protect card users. Customers have to literally go with the flow if they decide on variable rate credit cards.
Fixed rate mortgages guide Fixed rate mortgage loans are the most common product on the UK mortgage market, with the vast majority of time buyers and mortgage borrowers seeking the reliability of a rate loan. When you choose a fixed rate mortgage the amount you pay every month will be fixed for a specified period of time, whatever happens to the Bank of England base rate and the standard variable rate offered by your mortgage lender.
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On the other hand, it should not be assumed that a fixed rate card will impose APRs that will never change. The term 'fixed rate' here would be better explained as a rate that is stable for a longer period of time as compared to variable rate cards. Companies can merely issue you a 30-day notice in writing and your APR can suddenly jump a percentage or two, with or without your consent. One such example is the introductory low APR promotions that companies use to enlist new credit card users. After 6 to 12 months of 0% APR, card companies can immediately change your fixed rate credit card APR to a figure that is higher than most cards without the introductory 0% APR.
- An introductory interest rate expires (e.g., when a zero or low promotional rate ends);
- A variable interest rate adjusts according to a predetermined rate index, such as the prime rate;
- An interest rate was previously agreed upon by both card issuer and cardholder; or
- The cardholder agrees to the credit card rate increase when it's first proposed.
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Adam Goldman recommends Find Credit Cards to find an HSBC NV card.
Credit card exchange rates are based on the Visa and MasterCard wholesale rates, with a loading percentage usually added by the card issuers.
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