Fixed-rate credit cards charge an annual percentage rate (APR) that remains unchanged throughout the life of the account. They differ from variable-rate cards, which have APRs that change over time. Fixed-rate cards are best for anyone who carries a balance and wants to avoid future rate hikes. These cards are offered primarily through credit unions.
How Fixed-rate Credit Cards Work
Fixed-rate credit cards charge an APR that never changes. Low fixed-rate credit cards protect cardholders against rising interest rates. You can use fixed-rate credit cards to pay for expenses just like you would a variable-rate credit card.
Like variable-rate credit cards, some fixed-rate cards offer rewards and additional features. Not only does the ongoing APR on fixed-rate credit cards never change, it’s typically lower than what variable-rate cards charge. However, variable-rate cards are much more widely available because few issuers offer fixed-rate cards. These cards offer various credit card options like rewards and additional features like TSA Pre✓® reimbursement.
How Variable-rate Credit Cards Work
Variable-rate credit cards offer APRs that can increase or decrease over time. Rates are often tied to an index that adjusts based on changes to short-term Federal Reserve lending rates. Issuers have some latitude to change rates at their discretion, but they cannot, in most cases, raise rates on existing balances, and they must give you a 45-day notice before changing your rate on new balances.
Variable-rate cards are best for anyone who typically pays their bill in full each month. Variable-rate cards are very common and are offered by all major credit card issuers. They have APRs that typically range from 8.50% to 29.99% variable. Although variable-rate cards aren’t protected from Federal Reserve hikes, issuers do offer some low interest rate credit cards.
Who Fixed-rate Credit Cards Are Right For
Fixed-rate credit cards are best for people who are looking for cards that have low financing costs and who also live near a credit union that issues one. These issuers also offer a variety of card types, including rewards, low-interest rate, and no-interest credit cards. If you plan on carrying a balance for longer than a month, a fixed-rate credit card is a good option.
Low fixed-rate credit cards are also great options for students and young adults. Many students who are just starting out are looking to fund school expenses and build credit. Some universities have credit unions that offer fixed-rate credit cards for students. Students who qualify for a fixed-rate card will get the benefit of a locked-in rate that’s comparatively low and won’t increase later. Fixed-rate cards are a better long-term financing option than variable-rate cards.
Fixed-rate Credit Card Costs
Like variable-rate credit cards, fixed-rate credit cards may have an introductory APR, an ongoing APR, and additional fees. Credit unions are member owned and operated and not for profit, so it may cost an additional membership fee to join. Membership fees are usually just an amount of cash that’s required for a minimum deposit into a savings account, although some credit unions may charge an actual fee.
The costs of fixed-rate credit cards are:
- Credit union membership: An initial deposit typically ranging from $5 to $25.
- Introductory APR: A low-interest APR only available during an initial period after account opening. Intro APRs generally range from 0% to 5.49% for six to 18 months.
- Ongoing APR: The cost to finance a balance. The APR generally ranges from 7.9% to 16.9%.
- Annual fee: The fee incurred on your card once every year as a cost of ownership. Most fixed-rate cards charge no annual fee.
- Late fee: The fee incurred when you’ve missed a payment due date. Fees typically range from $15 to $25.
- Balance transfer fee: The charge incurred after transferring a balance, typically 3% of the transaction. Most fixed-rate credit cards have no transfer fees.
- Cash advance fee: The fee assessed to your account after taking cash from your credit card. Most fixed-rate cards have no cash advance fees.
Fixed-rate credit cards offer more than just lower costs on ongoing APR; they also have fewer fees overall. Because all fixed-rate credit cards are offered through credit unions, cardholders will save money on credit card financing because of their membership.
Fixed-rate Credit Card Providers
Major card issuers no longer offer fixed-rate credit cards because the Credit Card Act of 2009 made it more difficult to increase rates. These cards were formerly fixed-rate in name only. Since then, you can only apply for a fixed-rate card is through a credit union. Credit unions are co-ops that offer memberships and banking services based on schools, employers, places of worship, and location of residence.
Credit unions that offer low fixed-rate credit cards include:
1. UNIFY Financial Federal Credit Union
Based out of Torrance, California, UNIFY Financial Federal Credit Union has locations across the U.S. This credit union offers a variety of credit cards, including low fixed-rate credit cards. It also offers credit card balance transfer rates as low as 5.49% for the first 12 billing cycles. These cards have ongoing APRs as low as 9.49% and special introductory APRs as low as 5.49% APR for the first six billing cycles.
UNIFY offers three fixed-rate credit cards, including the Visa® Platinum credit card with a limit up to $50,000, the Visa® Gold credit card with a limit up to $14,999, and the Visa® Classic credit card with a limit up to $4,999. You can qualify as a UNIFY Financial Federal Credit Union member either through working at or living in a qualified area, or by referral. You can also qualify by having a membership with a partnering nonprofit organization.
2. Qside Federal Credit Union
Qside Federal Credit Union is based in Queens Village, New York. It offers three low fixed-rate credit cards, including the Mastercard® Classic credit card that has an ongoing APR of 12.9%. It also offers the Mastercard® Platinum Rewards credit card that has an ongoing APR of 9.9% and the Mastercard® Platinum credit card that has an ongoing APR of 8.9%. Qualification is based on creditworthiness.
This credit union offers low fixed-rate credit cards with limits up to $50,000 and additional features like travel accident insurance. These credit cards are best for consumers who live in the Queens, New York, area. You can qualify for a membership with Qside Federal Credit Union by living, working, or worshiping in designated areas of Queens. You can also qualify based on your employer or by family referral.
3. Pacific Federal Credit Union
Pacific Federal Credit Union is located in Pomona, California. This credit union offers fixed-rate credit cards with tiered APR rates of 7.9%, 9.9%, 4.9%, and 16.9%. You’ll be required to open an account with a minimum deposit of $5 to apply. Some cards have limits as high as $15,000. You must be an employee of a partner company or have a family referral to qualify for membership. Ultimately, your qualification for a card is based on your credit worthiness.
4. Entertainment Industries Federal Credit Union
Entertainment Industries Federal Credit Union is located in Elizabeth, New Jersey, with an additional location in Brooklyn, New York. They offer fixed-rate credit cards at 13.90% APR. This card has no annual fee and no fees for transactions or cash advances. Membership requires a minimum $5 deposit. You’ll also need to work for a designated company, or live, work, worship, or attend school in Elizabeth, New Jersey.
5. Purdue Federal Credit Union
Purdue Federal Credit Union caters to students or alumni of Purdue University located in West Lafayette, Indiana. It offers low fixed-rate credit cards with credit limits of $5,000 or more and introductory rates as low as 1.9% APR for 12 months. They also have ongoing APRs of 11.5% to 17.5%. Membership is open to employees of affiliate companies or by family member referral. A minimum $5 deposit is required.
Fixed-rate Credit Cards for Businesses
We were unable to find any issuers that offer fixed-rate business credit cards. The next best thing is business cards that offer a low APR. A good alternative for businesses looking for low-cost financing is the U.S. Bank Business Platinum Card. This card offers 0% APR for the first 12 months and an ongoing APR of 12.24% to 20.24% variable. This card also has no annual fee. Qualification depends on your creditworthiness.
Pros & Cons of Fixed-rate Credit Cards
Just like variable-rate credit cards, there are pros and cons to fixed-rate credit cards for consumers. Fixed-rate cardholders receive the benefits of having lower APRs and fees than variable-rate cardholders. However, because of scarcity, people may find eligibility to be an issue because of the required credit union memberships.
Pros of Fixed-rate Credit Cards
The pros of fixed-rate credit cards are:
- Protection against prime rate changes: Consumers won’t have to worry about Federal Reserve interest hikes because APRs will not change.
- Better for long-term balances: Fixed-rate cards are best for consumers looking to carry balances without APR increases adding higher interest and more cost to their bottom line.
- Lower APR than variable-rate cards: Fixed-rate card issuers frequently offer lower APRs than variable-rate credit cards.
- Lower fees: Most fixed-rate credit cards have no fees on cash advances and balance transfers. Consumers will be able to transfer balances without added cost.
Cons of Fixed-rate Credit Cards
The cons of fixed-rate credit cards are:
- Hard to find: Because no major credit card issuer offers this type of card, it is difficult to locate and apply for one.
- Fewer rewards: Some fixed-rate credit cards offer fewer rewards options than variable-rate credit cards.
- Eligibility: If you don’t already have one, in order to obtain a fixed-rate credit card, you’ll also need to qualify for a membership with a credit union.
Alternatives to Fixed-rate Credit Cards
Fixed-rate credit cards aren’t available with any major banks. Consumers looking for low fixed-rate credit cards may not be able to locate and apply for one. This is where understanding your alternatives can be beneficial. Consumers who can’t get fixed-rate credit cards should look for cards with a low ongoing APR and no annual fees. Credit cards that have a 0% APR with a decent introductory period are ideal.
The alternatives to fixed-rate credit cards are:
The BankAmericard® Credit Card is a good option for consumers who want a card without an annual fee. If you need to transfer a balance, you’ll be able to take advantage of 0% introductory APR for 18 billing cycles for purchases and balance transfers made within the first 60 days of account opening. It has an ongoing 15.24% to 25.24% variable APR. There’s no penalty APR for late payments on this card. Check your FICO® score through online banking for free.
The U.S. Bank Visa® Platinum Card is best for consumers looking for low cost financing with 0% introductory APR for the first 18 billing cycles. This card has an ongoing APR of 14.49% to 25.49% along with no annual fee. Cell phone protection and Free TransUnion® Credit Score come as additional features with the U.S. Bank Visa® Platinum Card.
For businesses looking to earn rewards at a low cost, BBVA Compass Visa® Business Rewards Credit Card is a good option. It has 0% introductory APR for the first nine billing cycles. It also has an ongoing APR that is one of the lowest offered for businesses, at 11.24% to 25.24%. Transfer a balance at an introductory 0% to 3.99% variable APR for one year on transfers made within the first 90 days. This card is one of the best business credit cards for fair credit.
The Bank of America® Platinum Visa® Business Credit Card is good for businesses that want a no-interest introductory offer and no annual fee. It has a 0% introductory APR for 7 billing cycles and an ongoing 10.99% to 21.99% variable APR. This card also has additional perks like $100,000 in travel accident insurance and car rental insurance, emergency ticket replacement, lost luggage assistance, and extended protection. Read more in our full credit card review.
Frequently Asked Questions (FAQs)
We went over a lot of information regarding fixed-rate credit cards, but there may be some additional information you want to know that we haven’t quite covered. We’ll cover the most commonly asked questions here. If you have more questions, you can leave us a comment by visiting our Fit Small Business forum or you can leave a comment below and one of our experts will respond to you.
Are there any fixed-rate credit cards?
Yes, fixed-rate credit cards are still available, but they aren’t easy to find. Credit unions are the only issuers that offer fixed-rate credit cards to consumers. They became less common after the 2009 Credit Card Act, after which all the major banks opted for variable-rate credit cards instead.
Do credit cards have fixed or variable rates?
There are two kinds of credit cards: fixed-rate credit cards and variable-rate credit cards. Variable-rate credit cards are the most common type of card and are offered at all major credit card issuers. Fixed-rate credit cards are less common and can only be found at certain credit unions.
Are there credit cards with no interest?
No-interest credit cards are available with both fixed-rate credit cards and variable-rate credit cards. No-interest credit cards offer an introductory APR of 0% for a limited period of time after your credit card account is opened. No interest credit card periods typically range from seven to 18 billing cycles.
Although fixed-rate credit cards offer low interest rates and lower fees than variable-rate credit cards, only credit unions offer them. You can save money on financing with a low fixed-rate credit card, if you can find one. Consumers looking for an alternative to fixed-rate credit cards should look for variable-rate cards with no-interest and low ongoing APRs.