Variable rate CCs

[bichonmom]

My visa card with my local CU is changing to a variable rate, which will be based on the prime rate plus a margin. It has been a non-variable rate, and I believe my other CCs are like that as well. They're doing this across the board on all CCs.

Does anyone have any CCs w/non-variable rates? I'm not carrying a balance, but it concerns me, because if I were to carry a bal, the interest could go through the roof without any warning.

I am seriously considering cancelling the CC because of this. It's also my lowest CL and they denied my last CLI request (even though I have several large CLs with Amex, CIti, Barclays).

Anyone have thoughts on variable rate CCs? I wonder if this has anything to do with the world events, economy, etc. When I called, the rep said that the prime rate hasn't changed since '09; however that doesn't mean it won't.

[user5387]

PSECU is 9.9 fixed.

I'd suggest shopping around -- there are lots of CUs, and many of them have fixed rates.

DepositAccounts.com maintains a list of CUs open to anyone.

[coldnmn]

Barclay Ring is 8%

[bichonmom]

Yeah, most CCs are fixed rate. I'm just wondering if anyone else is seeing non-variable rate CCs. Is this an upcoming trend? Or is this just a strange thing this CU is doing?

[Anonymous]

I recently thought more and more cards are fixed, but I looked yesterday and found most of them are in fact variable.  For example,

CSP: 15.24%. This APR will vary with the market based on the Prime Rate.†

BCE: After the introductory period expires, your APR on purchases and balance transfers will be based on your creditworthiness and other factors as determined at the time of account opening. These APRs will vary with the market based on the Prime Rate.

Citi: After that, your APR will be 12.99%, 17.99%, or 22.99%, based on your creditworthiness.  These APRs will vary with the market based on the Prime Rate.

I guess they really have to be indexed or the issuers risk is too big.

[enharu]

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@bichonmom wrote:

Yeah, most CCs are fixed rate. I'm just wondering if anyone else is seeing non-variable rate CCs. Is this an upcoming trend? Or is this just a strange thing this CU is doing?

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A lot of the variable rates CCs, such as CSP, are rewards card. Regardless of how high the rates spike, they're never a good choice to leave any sort of balance on in the first place simply because any interest charge will wipe out rewards by a huge margin.

Usually the cards that do not have "as-good" rewards program, such as Freedom, have a fixed rate APR (12-29%), though the bank reserves the right to change it at any point in time.

[Anonymous]

Enharu, I don't see the difference between the Freedom and CSP.  From the Chase site:

Freedom: After that, 13.99% to 22.99%, based on your creditworthiness. These APRs will vary with the market based on the Prime Rate.

CSP: 15.24%. This APR will vary with the market based on the Prime Rate.†

So the CSP doesn't have a range, but the Freedom and CSP will both vary with the Prime rate.

[bichonmom]

This CC happens to not have any rewards, either. Which is another reason why I'm considering closing it.

My interpretation of the interest rates was that it was based on the *current* prime rate when you got the CC (plus whatever margin they add, based on creditworthiness). Not that they will increase your rates if the prime rate changes in the future. It's possible I've misinterpreted it wrong, though.

For ex, my Citi is 16.99%. When I got the card last year, that is the rate I got and is showing on my current statement. But if I were to app for the card today, assuming I qualified at the same level, the rate would be 17.99%. I guess Citi must have raised their rates at some point since I got the card; however, they haven't change current cardholders' rates.

[user5387]

What I've typically seen the last few years is variable rates, where you are assigned a margin over the the prime.

For example, with the prime rate at 3.25%, and an assigned margin of 12.74%, your current rate would be 15.99%, and would go up if the prime goes up.