What is a variable rate credit card?
A variable rate credit card is a type of credit card that has an interest rate that can change over time. This rate is usually tied to a benchmark interest rate such as the prime rate. This means that when the benchmark rate rises, so does the interest rate on the credit card. In Texas, the law states that variable rates on credit cards must be disclosed in the terms of the agreement. As such, the issuer must provide clear and conspicuous statements that disclose when and how the rate may be changed. Additionally, the issuer must provide notice to the cardholder prior to the change taking effect. This notice must be in writing and must be provided at least 45 days of prior to the rate change. It is important for Texas consumers to be aware of variable rate credit cards because they can lead to a significantly higher payment if the rate is adjusted upward. As such, consumers should always read the terms of a credit card agreement carefully before signing to ensure they understand any variable rate changes that may occur.
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