What is a variable rate credit card?
A variable rate credit card is a type of credit card that comes with a fluctuating interest rate. This means that the annual percentage rate (APR) of the card may increase or decrease over time, depending on the market rate of interest. In the state of California, the law regulating variable rate credit cards is the Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009. This law places limits on the fees credit card companies can charge and requires them to give customers 45 days’ prior notice before raising rates or changing terms. It also requires that the interest rate on variable rate credit cards is tied to a “benchmark” rate that can be tracked by the credit card company, such as the prime rate of the largest banks. Because of such laws, consumers in California can be certain that they will be informed when their credit card interest rates are changed and can be better prepared for the financial implications of such a change.
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