New Lending Laws Put Fixed-Rate Credit Card Offers on Endangered List
August 05, 2009
When new credit card regulations take effect early in 2010, lenders will have few opportunities to adjust percentages on fixed-rate accounts. Even if borrowers make mistakes that entitle lenders to assess penalty rates, those borrowers can regain those original fixed-rate deals by getting their accounts back in line with program guidelines.
Therefore, many personal finance experts predict that fixed-rate credit card offers will all but disappear by the end of 2009. "Fixed rate credit cards are a dying breed. This is not all bad news for consumers, though, as there has never been a truly fixed rate card to begin with. Some card issuers have used fixed rate cards in the past as more of a marketing ploy. The new credit card law targets fixed rate offers," according to Curtis Arnold, founder of Cardratings.com
One market research firm sampled lenders' direct mail offers, discovering that only one in ten mail pieces offered prospective customers a fixed-rate credit card. Meanwhile, some major banks have already transitioned customers with existing fixed rate credit card accounts into new, variable rate accounts.
Another bright side of the credit card industry's strategy, according to some analysts, is that today's low prime rate will shield many consumers from exorbitant interest rates. As the prime rate rises and credit card issuers enjoy healthier profit margins, fixed-rate card offers may return. Until then, many cardholders can expect less certainty about their monthly finance charges.