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Fixed Rate Credit Cards: A Bygone Era

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fixed-rate-credit-cards-a-bygone-eraSome large credit card issuers including J.P. Morgan Chase, Bank of America, and Discover Bank have recently told some of their credit card holders that their fixed rate credit cards were being converted to a variable rate credit card. 

Although the banks are saying the changes are to better manage their business costs and credit card market conditions (another way of saying credit card defaults)  the change is probably brought on by the Credit Card Accountability, Responsibility and Disclosure Act which starting next month will require banks to notify fixed rate credit card holders of any increase in their credit card rates 45 days in advance.

To bad Congress didn't think of passing a law that prevents credit card companies from changing a credit card from a fixed rate to a varible rate. Though if they did banks would have just found another loophole.

Variable rate credit cards are usually tied to the Prime Rate and rise and interest rates rise.

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Author: Brian McKay
July 26th, 2009