Costs and Fees: When is a ‘Fixed’ Rate not Fixed?

Question: My “fixed-rate”credit card company has offered me a balance transfer giving a fixed rate of 5.9% for the life of the loan, this rate is fixed as long as I am not late on any payments. No other details are given on the balance transfer, it is clearly stated in the fine print on the agreement that they have the right to change the terms of the credit card anytime when they want and for that they just give the cardholders only 15 days’ notice. The new terms can be refused by me but in that case my account shall be closed by them.


My question is that, Is this fixed-rate balance transfer any more fixed than the “fixed” rate on the credit card itself? It has been explicitly mentioned there in black and white that it is fixed for the life of the loan.

If in case they change the terms of the credit card on me and I refuse, then would I be able to pay off the balance (purchases, cash advances balance transfers or special balance transfers like above) under the old terms, or, would they be able to make me pay it all off immediately?

Answer: I must say first that you have asked some questions that are of great importance and you are smart enough that you have read the credit card agreement before deciding that whether to transfer your balances to a new credit card or not.

Each card agreement is different from the other, so here I will answer your questions in a more general way. A card issuer has got the right to change the interest rate of your credit card account by giving a notice in writing to the cardholder. Being a cardholder you have the right to refuse the new rate but that also you have to do in writing; and in that case the card issuer will usually close the account.


Read the Rate-Change Letter Carefully

You should make sure that you have read the rate-change letter from the card issuer very carefully. It will provide you a deadline up to which you can write to them stating that the new terms of the agreement is not accepted by you. If in case you do not meet the deadline, then you will  have to pay the higher interest rates until that you have paid all of your balances.

After that the issuer has closed your account, you would be able to pay off the remaining balance at the original interest rate as long as you keep up your end of the contract. Explaining this in other words, you can pay off the balance at the original interest rate as long as you make at least the minimum payment on time.

Make your payments on Time

One of the many reasons due to which the cardholders get in trouble with credit cards is that they do not make payments on time, specifically for those cards by which very low introductory rates are offered. When once you have signed a credit card agreement then that means that you are agreed to pay the minimum amount due by the due date that is mentioned on your statement. If you have not held up your end of the agreement, then it is the right of card issuer that he can charge you a late fee (often $29 or more), or he may raise your interest rate, or both.


Once that the agreement is broken by you then you have no choice but to pay the increased interest rate or you may transfer the balance to another card. Even if then you have decided to close the account, still the new increased rate would apply until the balance is paid off completely.

Watch out for Balance-Transfer Fees

In addition to that, watch out for balance-transfer fees. They might be costly for you. Also, in case if you are using this card regularly, then you should look out that what happens to new items charged. In many cases just due to the reason that you are now carrying a balance, even at a good rate, you will be charged an interest at the “old high” rate for any new purchases that is made by you, starting on the day of purchase without giving you any grace period.

Tips for Credit Card Balance Transfer

Below I have given you some tips for card balance transfers:

  • You should read the credit card agreement very carefully and you should ensure that all the terms of card agreement have been understood by you very well.


  • You should consider that whether you need to close the cards with higher interest rates from which you are transferring balances. If you are going to close an account than that mean you lose that line of credit, and a change that is in the ratio of available credit to debt outstanding can lower your FICO score.
  • When you are transferring balances from one card to another in an effort to consolidate debt and lower interest rates, then you should make sure that you have a plan for how much money you will be paying each month in order to bring the balance down and you should not add any additional purchases to the card.
  • You should keep close track of the due dates. A good rule of thumb is that you should make the on the same day when you have received the statement. In that way you are assured that your payment will not be late. The due dates can be changed by the issuers at any time without giving you any prior notice.
  • If any of the terms are changed by your credit card issuer changes under which you first transferred your balances, remember on thing always that you have the right to refuse the change in writing and then you would be able to pay off the balance at the original rate.

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is an experienced IT Consultant turned Blogger, Interested in Technology, Personal Finance, Humans and Life...You and discover more about him by following RMak on twitter.

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