If you can remember when credit card issuers regularly offered fixed interest rates on at least some of their cards, chances are you’re not a millennial. So, what happened to fixed-rate credit cards?
Simply put, the Credit CARD Act of 2009 happened, but more on that in a little bit. For now, you may be glad to hear there are still places you can find the best fixed-APR credit cards, even these days.
Fixed-APR Cards Can Be Found at Select Credit Unions
Credit unions tend to be some of the best places to still find fixed-APR credit cards. Unlike banks, credit unions are member-owned and not driven by profit-minded shareholders, making them more willing to accept less of a return on their loans and credit card offerings.
Members get the benefit of lower credit card interest rates, and the credit unions fulfill their mandate of serving the community.
The interest on a fixed-rate credit card issued by a credit union tends to be lower than that of a variable-rate card. Some credit unions offer fixed-APR credit cards with rates as low as 6.99%, a far cry from the national average credit card interest rate of more than 17%.
However, you still need to have a good credit score to qualify for these low-APR credit cards.
1. UNIFY Financial Credit Union
UNIFY is a nationwide credit union with more than 50 branch locations that are open to almost anyone who wants to join. And, once you’re a member, you can choose from three credit cards with fixed rates as low as 9.49%, and with no annual fee.
There may also be special introductory rates on low fixed-rate balance transfers, also with no fee. Whether you qualify for the Visa® Classic, Visa® Gold, or Visa® Platinum will depend on your credit history and FICO score.
2. First Federal Credit Union
Open to residents of certain counties in Iowa, First Federal Credit Union members can choose between two Visa cards with fixed interest rates.
The First Federal Credit Union Visa® Premium credit card offers a fixed interest rate as low as 6.99%, with no balance transfer fees and no annual fee. This is one of the lowest fixed-APR credit cards on the market, so if you’re able to join this small credit union, it’s worth applying for.
3. Ardent Credit Union
Ardent Credit Union began under a different name as a credit union for employees of SmithKline Corporation and is now open to most residents of the greater-Philadelphia area. This credit union offers three Visa® credit cards with fixed rates as low as 9.99%.
There are no annual fees and no balance transfer fees for any of the fixed-APR cards, and you can even earn reward points or cash-back with two of them.
Best Low Ongoing APR Cards
A credit card with a fixed APR may not always be the best choice, depending on how you plan to use it. Many variable-rate credit cards have low ongoing APRs, with far more choices and options than those offered by credit unions.
And, in a low-interest-rate environment like the one we’ve been experiencing over the past few years, the rate charged on a variable-APR credit card can be quite competitive. Here are some of the best cards we recommend with a low ongoing APR.
Best 0% Promotional APR Cards
Credit cards with 0% promotional offers can be effective as part of an overall debt reduction strategy, save you money in interest on a large purchase, or simply help you pay off higher-rate cards faster. Many 0% promo rates extend for 15 and even 18 months in some cases.
Just be sure to use the promotional rate period wisely, as the regular rate on these cards is often higher than you would find on a conventional credit card. Here are some of the top-rated 0% APR cards.
- Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening.
- Earn unlimited 1.5% cash back on all purchases.
- 0% Intro APR for 15 months from account opening on purchases, then a variable APR of 14.99 - 23.74%.
- No annual fee
- No minimum to redeem for cash back
- Cash Back rewards do not expire as long as your account is open
0% 15 Months
- Earn a $150 Bonus after you spend $500 on purchases in your first 3 months from account opening
- Earn 5% cash back on up to $1,500 in combined purchases in bonus categories each quarter you activate. Enjoy new 5% categories each quarter!
- Unlimited 1% cash back on all other purchases - it's automatic
- 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 14.99 - 23.74%.
- 3% intro balance transfer fee when you transfer a balance during the first 60 days your account is open, with a minimum of $5.
- No annual fee
0% Intro APR on Purchases 15 months
0% Intro APR on Balance Transfers 15 months
14.99% - 23.74% Variable
at Bank Of America'ssecure website
- 3% cash back in the category of your choice: gas, online shopping, dining, travel, drug stores, or home improvement/furnishings
- 2% cash back at grocery stores and wholesale clubs
- 1% cash back on all other purchases
- You’ll earn 3% and 2% cash back on the first $2,500 in combined choice category/grocery store/wholesale club purchases each quarter, then earn 1%
- There's no annual fee and your cash rewards don't expire. Each month, as you plan for future purchases, you can change your 3% choice category online or through our mobile app.
0% Intro APR for 15 Billing Cycles
0% Intro APR for 15 Billing Cycles (for balance transfers made in the first 60 days)
13.99% - 23.99% (Variable)
What is the Best APR Rate for a Credit Card?
We all want the best APR we can get, but keep in mind that the interest rate you’ll be offered on a credit card is directly related to your credit score and overall creditworthiness.
It’s a function of how likely, in the eyes of the card issuer, you are to default on your debts. The better your credit score and history, the lower your APR is likely to be.
That being said, the interest rates offered by card issuers vary widely. Rewards cards, for example, often come with a higher APR thanks to their perks and benefits. This is especially true of cash back cards.
In most cases, credit cards with no frills or rewards will generally have a lower APR than do rewards cards. Store credit cards, on the other hand, typically charge some of the highest variable interest rates around.
Perhaps not surprisingly, the best credit card interest rates can usually be found at credit unions or small community banks. Rates for some of these cards can be as low as 6.99% fixed. And credit union membership has benefits that extend beyond low APR credit card rates.
Being affiliated with an organization or membership-based group can often get you a low APR on a credit card. For example, veterans of the armed forces and their family members may qualify for the USAA Visa Platinum card that offers rates as low as 8.40%.
What is the Difference Between a Fixed & Variable APR?
Most credit cards held by American consumers have variable interest rates — but what does that mean exactly? A variable interest rate or APR fluctuates according to the index it follows, usually the prime rate, which is based on the federal funds rate set by the Federal Reserve.
If the prime rate goes up, so will your credit card APR. By contrast, a fixed APR is not based on a fluctuating index rate but is set at a fixed value — at least for a period.
Some cards with fixed rates reserve the right to increase the rate, but only after notifying the cardholder and allowing them the option to close the card and continue paying any balance at the previous fixed rate. This consumer protection feature is part of the Credit CARD Act of 2009.
Most credit cards that offer a fixed APR do so for a minimum of one year, and sometimes longer. If the card issuer decides the interest rate is too low based on prevailing market rates, they must give cardholders a 45-day notice of any impending rate increase.
Cardholders can then decide if they want to continue with the new fixed rate or cancel the card. Still, having the security of a fixed-rate card, even if for just a year, can let you pay down debt at a known rate that you can build a budget around.
Even with the not-so-fixed characteristics of a fixed-APR credit card, the actual interest rate tends to be much lower than that of a typical variable-rate card. For example, some of the fixed-APR cards from UNIFY Financial Credit Union have rates as low as 9.49%, with introductory balance transfer rates even lower than that.
Can I Ask for a Lower Interest Rate?
If you’ve had your credit card for a year or longer and not missed or been late on a payment, you may be eligible for a lower interest rate. Of course, this depends on a lot of other factors as well, including your credit score, debt-to-income ratio, outstanding card balance, and even how frequently you use the card.
Credit card companies value and want to keep their best customers. That means consumers who are responsible in their credit card use, and who aren’t deemed to be a credit risk are more likely to be granted a lower APR.
If you choose to ask your credit card company for a lower interest rate, here are some things you can do to improve your chances of success.
First, know what your credit score is by requesting it from all three credit bureaus. Under federal law, you are entitled to a free credit report from each of the three major credit bureaus.
You can get a free copy at AnnualCreditReport.com. If you know your score and whether it has improved over the past year, you can use that information to bolster your case for a lower APR.
Second, know what your credit utilization rate is. This important ratio represents how much of your total combined credit you’re using, and how much is available.
Your CUR should be no higher than 30%. The lower your utilization rate, the more likely you are to get a lower APR.
Finally, do your research and find competing rates on credit cards that are similar to yours. The landscape for credit cards is very competitive, and if you can show that another card company has a better rate, you may be able to get yours to match it.
Take Advantage of Your Card’s Grace Period
If you’re looking for the best possible APR on a credit card, nothing beats 0% interest. What you may not realize is that almost any credit card can be a zero-interest card if you know how to take advantage of it.
Most credit card companies offer a grace period of around 25 days, during which they charge no interest on purchases made if you carried no balance from the previous statement period. That means if you started the billing period with a zero balance and paid off any charges incurred during the billing cycle, you won’t be charged any interest.
Since credit card companies are required to send out statements at least 21 days before the payment due date, thanks to consumer protections laid out in the Credit CARD Act, you have around three weeks to pay your balance each cycle and incur no interest.
While credit card companies aren’t required by law to offer a grace period, almost all major card issuers do. Make sure you check your card’s terms and conditions, also known as the fine print, to get the exact details of any grace period offered.
Paying interest on credit card charges can end up costing a lot of money over time. This is perhaps one of the greatest waste of wealth for American consumers.
If you’re unable to pay off your balance each month, then the next best thing is to find a card with a low or fixed APR. Often, the best fixed-APR credit cards are harder to find, but, hopefully, this guide has given you some valuable information on just where to look.