Financial Literacy - Smart borrowing
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How to get the best loan rates

3. The skinny on credit cards

What impacts rates: Variable rate credit cards are pegged to the prime rate and rise and fall with movements of the Federal Reserve.

Fixed-rate cards are a bit of a misnomer because the interest rate is not really fixed. Rates can change at the card issuer's discretion with as little as a 15-day notice.

However, credit card companies are quicker to react when rates are rising.

"Cardholders are more likely to see fixed rates increase when interest rates rise than they are to see fixed rates decrease when interest rates are falling," says Greg McBride, Bankrate's senior financial analyst.

Interest rates on gold and platinum cards are often lower, and have higher credit limits and annual fees.

They may come with added perks such as rental car insurance, travel points and cash-back rewards, but consumers generally need higher credit scores to qualify for them.

Highs and lows: In the mid-1980s, when credit card use first became widely adopted by consumers, standard fixed-rate cards carried an 18 percent-plus rate, and this trend persisted for many years, peaking in July 1991 at 19 percent. Rates finally began dropping significantly only about 10 years ago, when they vacillated between 14 percent and 16 percent. Over the past year, they averaged around 13 percent.

Gold and platinum cards generally offer lower rates to qualified customers with higher credit scores. Over the past three years, interest rates on gold fixed cards hovered in the 11 percent to12 percent range. Platinum fixed-rate cards ranged from a low of 9.8 percent in January 2006 to a high of 10.79 percent in February 2008.

Bankrate's Interest Rate Roundup gives you the latest information on credit card rates.

How to get the best rate: Card issuers are raising the bar higher when it comes to who gets the best rates.

"The whole spectrum is shifting, whereas in the past, card issuers might go after any consumer that has a credit score of 600 or better; today that's shifted to 650 or better," says Bruce Cundiff, director of payments research and consulting at Javelin Strategy & Research.

Consumers hunting for good deals should look for banks that haven't been stung by subprime lending and are still actively going after new cardholders.

"Those are where the real deals can be found when you're shopping around for a credit card," says Cundiff.

Try to correct anything on your report that can be perceived as a potential blemish. You can order a free copy of your report from each of the three major credit-reporting agencies once every 12 months.

Consumer sites that compare credit card offers can also save you money in the long run.

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Bankrate provides credit card information based on individual issuers, card type and credit type.

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