Credit Cards: How Fixed is "Fixed?"

“You want 20% risk free? Pay off your credit cards.”—Andrew Tobias

The credit crisis has caused some banks to cut back on credit card solicitations, but you’re still likely to see offers of low, low credit card interest rates show up in your mailbox. Most of these offers claim that the interest rate is “fixed,” but according to the fine print in the credit card contract, “fixed” probably doesn’t mean what you think it does. In fact, you could see a big bump in that “fixed” rate shortly after you sign up.

Is that legal? It sure is, says the credit card company. Didn’t you read the reams of fine-print inserts that came with your new card? If you had, you would almost certainly see a clause that gives the card issuer the right to change the terms of the credit card agreement at any time, with 15-days advance notice. So hitting you with a higher interest rate is legal, as long as they give you notice. Moral: Don’t believe everything you read in a credit card offer.

5.3 billion—Number of new credit cards offers sent to US households in 2007(Bankrate.com, 2008)

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