Credit Card Issuers Promoting Fixed Rates as Prime Set to Move Lower

Credit card issuers reacted quickly to the recent Fed rate cuts, lowering fixed rates on many of their offers in anticipation of further cuts.

During October, the average “Single/Go-to APR” based on credit card solicitations was 12.51%, down from 12.94% in the third quarter.

The Single/Go-to APR is the actual interest rate a credit card adjusts to after its introductory or promotional rate period expires.

By fixing rates now, before further rate cuts, card issuers can actually charge consumers a higher rate than what the going rate might be six months down the line.

When rates are on the up, credit card issuers offer variable rates, knowing they’ll likely win the interest rate game.

But when rates are declining, card issuers lock consumers into fixed rates, knowing rates will continue to fall lower.

Supposedly, Discover, in particular, is the king of this new strategy, with the majority of their new mailers offering fixed rate credit cards after largely offering variable rates when rates were climbing higher.

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