How to find fixed-rate credit cards and where have they gone?

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Finding a credit card with a fixed interest rate may seem like a good idea, but it’s more complicated than you may think. Banks and credit unions are hesitant to let borrowers sign up for a credit card that won’t keep up with rising interest rates set by the Federal Reserve, so they tend to create cards that offer variable rates instead. After all, they’re in the business to make money and credit cards with fixed rates might leave them making less.

Fixed-rate cards are virtually extinct

Fixed-rate credit cards are now “virtually extinct,” according to Greg McBride, CFA, chief financial analyst for Less than 5 percent of the 2,335 credit card agreements on file with the Consumer Financial Protection Bureau (CFPB) were related to cards with fixed or non-variable interest rates. Further, most of the roughly 60 fixed-rate agreements on file came from small lenders with limited regional footprints, according to a Bankrate analysis of the CFPB card agreement database from first quarter 2018.

The number of fixed-rate cards available dwindled after The Credit Card Accountability, Responsibility and Disclosure Act — or CARD Act — took effect in 2010, likely due to mandates on card issuers to give fixed-rate borrowers at least a 45-day notice before hiking rates.

On the flip side, cards tied to federal interest rates don’t require the same heads-up before rate increases. If your interest rate is based on the prime rate, for example, and that rate goes up, your issuer does not have to provide advance notice before increasing your rate.

“In this environment where interest rates are rising, you’re not likely to see fixed-rate cards come to market because variable-rate cards are built for an environment like this,” McBride says. “When rates are going up, rate hikes get automatically passed through to cardholders.”

How to find a credit card with a fixed rate

If you want to borrow money with a fixed interest rate, you may want to opt for a financial instrument other than a credit card.

Consumers with good credit can qualify for personal loans with low fixed interest rates, for example. These loans also offer fixed monthly payments and fixed repayment periods, making them easy to build into your long-term financial plan.

If you have your heart set on a credit card with minimal carrying costs, consider a card with a zero percent APR on purchases and balance transfers for a limited time — usually up to 15 months. Cards in this category won’t help you avoid interest forever, but they can help you save sizeable sums of money on interest until your offer ends.

There are a few true fixed-rate credit cards you can apply for, but keep in mind that most have high interest rates and come from smaller, regional banks. Some examples include:

Unity Visa® Secured Credit Card

If you expect difficulty getting approved for an unsecured credit card due to poor credit, you may want to consider a secured credit card. Secured cards are easier to get approved for, but you’ll need to put down a cash deposit as collateral.

The UNITY Visa® Secured Credit Card from OneUnited Bank offers a fixed APR of 17.99 percent for purchases. You may also qualify for an introductory 9.95 percent APR on balance transfers for six months. There’s a $39 annual fee and a 3 percent balance transfer fee (minimum $10) as well, and you’ll pay additional fees for phone customer service calls, expedited card delivery, credit limit increases and additional or replacement cards.

The bottom line

Credit cards with fixed interest rates may be going the way of the dinosaur, but it’s possible you’ll be better off with a variable rate card that offers a lower rate anyway. Make sure to check out low interest credit cards that you may be able to qualify for if you have good credit.

And remember that the best way to save money on credit card interest is to avoid it. Pay your credit card bills in full and on time each month, and you’ll never have to worry about your credit card’s interest rate.

Written by
Holly D. Johnson
Author, Award-Winning Writer
Holly Johnson began her career working in the funeral industry, which may make you wonder why she works in personal finance now. Yet, the funeral industry taught the author everything she needs to know about the value of one's money and time. Johnson left the mortuary business a decade ago in order to explore her passion for personal finance and travel the world, and since then, she and her husband have built a debt-free lifestyle that has them on the path to retire very wealthy in their 40s. Holly's love of budgeting also led to the creation of her debt payoff book, “Zero Down Your Debt: Reclaim Your Income and Build a Life You’ll Love."