When you shop for a credit card, you will be considering variable rate credit cards and fixed rate credit cards. A variable rate credit card uses the prime lending rate as its benchmark. Each lender then adds his own interest percentage and offers the variable rate credit card to his customer. Look at it this way as soon as there is an increase in the interest rates of the Federal Reserve, the bank rates also go up.
The best situation to go in for a credit card with variable rates is when you notice that the prime lending rate dips steadily. That is when variable rate credit cards are a good option, since you enjoy the benefit of low lending rates.
However, dont confuse the interest rate of variable rate credit cards with introductory offers made to you. These offers are only to attract you and expire after a specific period, say two months or four months. Subsequent to this, your variable rate credit card will attract a higher rate of interest. So dont make these special offers a basis for your decision while looking for a credit card with variable rates.
Factors that could influence the interest rate of your credit card
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