Understanding credit card interest rates can be helpful when looking at new credit cards. Credit Card interest rates can vary based on the type of interest you have and your credit score. Here is everything you need to know about the different types of credit card interest rates you can get.
There are three different types of credit card interest rates you can have.
Fixed Interest Rates – This type of interest is the most common and will allow you to have one interest rate for the length of the account. If your interest rate does change, you will get a 45-day notice. This notice will allow you to close this account or accept the new rate. This type of interest will allow you to estimate your interest payments the easiest since the rate doesn’t change.
Variable Interest Rates – This type of interest can give you some of the lowest interest rates you can find. But they will also fluctuate without any notice for however long your account remains open. While the lower interest rate can be an appeal, you may want to avoid this type of interest if you carry a balance. These rates will change with the prime interest rates, so when rates are low, your interest rate will be low or the opposite.
Promotional Interest Rates – Certain credit cards offer special interest rates for opening a new account. They are usually 0% or a lower percentage for the first 12 to 15 months. This can be great if you have a large purchase to make but need to put it on credit. Then, if you plan appropriately, you can have the total paid off before your interest kicks in.
You may find that one type of interest rate is best for your specific situation. Do your research to see which will be the best financial decision.