Fixed Rate vs. Variable Rate Credit Cards

I am frequently asked what the difference is between a variable rate and a fixed rate credit card, so let’s set it straight. When you sign up for a credit card, you’ll notice it offers either a fixed interest rate or a variable interest rate. A variable rate card is directly tied to an index, usually the Prime Rate index. So, when the Prime Rate rises by x%, the interest rate of a variable rate card subsequently rises by x% within one month.

A fixed rate card, however, is not tied directly to the Prime Rate. So, when the Prime Rate fluctuates, the interest rate of a fixed rate card usually stays the same. Now, there is the misconception that fixed rate credit cards will have a constant interest rate that remains the same all the time. Don’t be fooled. There is no such thing as a truly fixed rate card. Even fixed rate cards increase their rates at times with, some with short notice. Also, be aware that fixed rate cards can and sometimes do change to variable rate cards

So, which one is for you? You need to take two main factors into account. First, what is the current Prime Lending Rate; and second, what are the chances of the percentage rate plus Prime Lending Rate going above the fixed rate? Keep in mind that if you can stay disciplined and pay your balance each month there is no need to be concerned with the interest rate at all. But, if you are trying to get out of debt, this rate carries remarkable consequences so consider your current financial situation as well before deciding which credit card is for you.

To learn more about credit and find the credit cards you are eligible for, please visit Credit Card Details.

Make Money with 0% APR Credit Cards

You didn't read it wrong. You can actually MAKE MONEY with a 0% APR Credit Card. It's not a "get rich quick" scheme but it's not rocket science either. Here's how it works:

1. Credit card companies offer 0% introductory APRs for a period of 3-15 months. The 0% APR is usually only for purchases but some cards offer it on balance transfers as well. The trick is to capitalize on the 0% APR period.

2. To do this you'll need two credit cards (request the highest limit possible when applying). I like the Miles by Discover Card and the Pulaski Bank Gold Visa Card, but you can choose any card you like. The important thing to keep in mind is the balance transfer rate, balance transfer fee and 0% APR period. You want to find a card that has a 0% introductory APR and balance transfer rate. It's tough to find a credit card with no balance transfer fee but most will have a $75 cap and this will work fine.

3. With the two 0% APR Credit Cards of your choosing you want to pick one to request balance transfer checks or an online balance transfer. An online balance transfer is best because you can start earning money quicker.

4. Next, you take the 0% APR Credit Card that you would like to transfer FROM and max out the limit by transferring to the other card. This will create a NEGATIVE BALANCE on the credit card that you transferred to.

5. At this point you want to request a "credit balance refund." With most credit cards this can be done online. The credit card company will then send you a check for the negative credit amount.

6. Now that you have the money you want to do one of two things. Either apply the amount to high rate loans (other credit cards, home equity loan, etc.) or put it in a high yielding savings or checking account. You can find an account paying 5% easily (see bottom).

7. The money making part works like this. You either save a year's worth of interest on the balance you applied to other loans or you're going to make 5% for the same year on the money you put into a savings account. Simply put, if you put $10,000 into a savings account at 5% you'll make $500 in interest. If you paid a balance transfer fee of $75 you still profited $425. This isn't a large sum of money but it's free money. And with access to enough credit this process could be repeated several times.

There are some words of caution in using 0% APR Credit Cards to make money. Some people like to apply the money to stocks or bonds to make (potentially) more than 5%. This is fine but keep in mind that if one payment is late the 0% APR period ends. Then you're stuck paying the normal APR (probably more than the money is earning) and the money is tied up in stocks. With a savings account is 100% liquid and can pay off the credit card if it loses the 0% APR. This involves less risk and guaranteed money.

Your Credit Card Bill - The Day After Christmas

You can always expect to face a few challenges the day after Christmas. These can range from traffic jams as you return from a family visit to the challenge of waking up in the morning and returning back to the office. All of these will last a day or so. A challenge, not as temporary, is paying off the month’s credit card bill. Now those extravagant gifts aren’t looking so smart, are they?

The Associated Press reports that Americans are falling behind on making credit card payments "at an alarming rate, sending delinquencies and defaults surging by double-digit percentages in the last year and prompting warnings of worse to come." An increasing number of credit card users are in debt and are more than 90 days late in paying off outstanding balances. Credit card delinquencies are up 26 percent over a year ago, reports the news wire service. All we can deduce from this increase is that Americans aren't afraid of high-interest debt.

So if you are looking to make the transition from the “spenders” category to the “savers”, may we suggest you skip the numerous after-Christmas sales this year?