Money Moves

Money Moves

The knowledge you need to put your best financial foot forward.

  • Personal Finance
Fixed Rate vs. Variable Credit Cards

Navigating financial decisions can be tricky, especially if individuals don’t fully understand all their choices. One crucial financial decision, that most people struggle with, is deciding between fixed or variable rate credit cards. When confronted with this choice try determining the most suitable option for the financial situation.

Fixed Rates

Fixed interest rates remain constant throughout duration of a loan or line of credit. This means that regardless of market fluctuations or economic changes the rate remains unchanged. This stability offers predictability and allows individuals to plan with certainty

Pros of Fixed Rates

  • Budgeting Predictability: With fixed rates, borrowers know exactly how much they need to pay each month, making budgeting more manageable and predictable.
  • Protection against Rate Increases: If interest rates rise, borrowers with fixed rates are shielded from those increases, providing a sense of security and financial stability.
  • Peace of Mind: Knowing that the rate won't change provides peace of mind, especially during economic uncertainties.

Cons of Fixed Rates

  • Potentially Higher Initial Rates: Fixed rates might start higher than variable rates when the market rates are low, which could lead to paying more initially.
  • No Benefit from Rate Decreases: If market interest rates fall significantly, individuals with fixed rates won't benefit from lower rates.


Variable Rates

Variable rates fluctuate based on changes in benchmark rates, such as the prime rate. These rates can change periodically, resulting in varying monthly payments.

Pros of Variable Rates

  • Potential for Lower Initial Rates: Variable rates often start lower than fixed rates when the market rates are favorable, resulting in lower initial payments.
  • Possibility of Rate Decreases: When market interest rates decline, individuals with variable rates enjoy reduced interest payments, potentially leading to savings over time.
  • Flexibility: Some variable rate loans offer features like caps or floors, limiting the maximum or minimum rate changes, providing a degree of protection against extreme rate fluctuations.

Cons of Variable Rates

  • Uncertainty and Risk: Fluctuating rates can lead to uncertainty in budgeting and financial planning, especially if rates increase unexpectedly, causing higher payments.
  • Exposure to Rate Increases: If market interest rates rise, individuals with variable rates may face increased payments, potentially impacting their financial stability.



The decision between fixed and variable rates depends on various factors, including individual financial goals, risk tolerance, and market conditions. For those seeking stability and predictability in their finances, especially during uncertain economic times, fixed rates might be more suitable. On the other hand, individuals willing to take on some level of risk for potential savings and who can adapt to fluctuations may find variable rates more appealing. For specific examples of credit card comparisons visit our credit card comparison table to find what works best for you. 

Get predictability with every payment

With a Purdue Federal Visa® Fixed Rate Credit Card you'll find budgeting predictability, protection against rate increases, and most importantly – peace of mind.

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The information and topics featured are for informational purposes only and does not constitute legal, tax or financial advice. All financial situations and circumstances are different and may not apply to the specific information provided. Seek the advice of a financial professional, tax consultant, or legal counsel to obtain guidance specific to your needs.