Less than twelve months ago variable interest rate credit cards were almost a full percentage point lower than their fixed rate counterparts. However, during the same period, the prime rate, which most variable rate credit cards are based on, has climbed from 4.50% to 6.50%. Today, variable rate cards carry an average go-to interest rate of 14.24% versus 13.76% for the average fixed rate cards. In August 2004, the average go-to variable interest rate was 11.89% versus 12.85% for fixed rate cards. (The averages do not include introductory or punitive interest rates.) Due to the rapid rise in the prime rate, many top issuers have abandoned their fixed rate offers, switching back to variable rates. In 2001, slightly more than half of all credit cards carried fixed interest rates. Today, nearly three-quarters carry variable interest rates.
| CREDIT CARD INTEREST RATES |
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| Month | Prime | Fixed | Variable |
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| Aug 04 | 4.50% | 12.85% | 11.89% |
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| Sep 04 | 4.75% | 12.88% | 12.11% |
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| Oct 04 | 4.75% | 13.00% | 12.19% |
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| Nov 04 | 5.00% | 13.04% | 12.37% |
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| Dec 04 | 5.25% | 13.09% | 12.49% |
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| Jan 05 | 5.25% | 13.22% | 12.67% |
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| Feb 05 | 5.50% | 13.25% | 12.84% |
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| Mar 05 | 5.75% | 13.32% | 13.08% |
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| Apr 05 | 5.75% | 13.39% | 13.17% |
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| May 05 | 6.00% | 13.48% | 13.45% |
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| Jun 05 | 6.00% | 13.59% | 13.61% |
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| Jul 05 | 6.25% | 13.64% | 13.84% |
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| Aug 05 | 6.50% | 13.76% | 14.24% |
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| Source: CardData (www.carddata.com) |
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