Variable Interest Credit Cards
Applying a rate of interest is way for the banks and lending institutions to earn something from their customers. Credit Cards companies do the same, as they charge a specific amount of interest on all the services and facilities their cards would have provided you.
However, when you talk about the interest rates, you will come across the credit cards which are on offering with a fixed rate of interest. It is the rate which will be fixed for you and you will have to stick to this when you will make a purchasing.
On the contrary, there are a lot of credit cards, perhaps, most of the available ones, are based on variable rate of interest, which may keep on changing in future. The variable rate of interest is usually at a higher rate of interest. The reason behind that is that these rates are in addition with the prime rate of interest, so when there is a fluctuation to the prime rate, the rate of interest on credit cards will always move up and down. So, it means that it may become beneficial at some point of time when there is a relative decrease in the Prime rate of interest as you will have to pay less, but, it is totally circumstantial and can go either way. So, basically, it is the prime rate of interest that affects the variable rate of interest and keeps that varying.
The thing that would go against to the variable rate of interest is that you never know when you will have to face and increment in the rate of interest and to make matters worse, you may not be able to do anything to counteract this. So, you must keep this point in mind when going for a credit card with a variable rate of interest.