QWhat Is The Difference Between A Variable Rate And A Fixed Rate Credit Card?
AAll credit cards offer either a fixed interest rate or a variable interest rate. A variable rate card is directly tied to the prime rate. Thus, when the prime rate is raised by .50%, the interest rate of a variable rate card subsequently rises by .50%. Credit card rates are usually higher than the prime rate. The difference between the prime rate and the actual rate of a given card is called margin. A fixed rate card, however, is not tied directly to the prime rate. Thus, when the prime rate rises or falls, the interest rate of a fixed rate card usually stays the same.