Fixed-Rate Cards Going Extinct

Sad news: Fixed-rate credit cards have been put on the endangered-species list.

To reduce risk of loss, card issues such as Bank of America (Stock Quote: BAC) and J.P. Morgan Chase (Stock Quote: JPM) are cutting back use of cards carrying fixed interest rates in favor of ones carrying floating rates. With your rate constantly shifting according to market conditions, or according to the issuer’s view of your potential for falling behind on payments, it will be harder to figure how much you’ll have to pay each month.

Unless, of course, you follow the long-established guidelines for smart credit card use.

The cardinal rule is simple. If you don’t carry a balance, it doesn’t matter whether the card rate is fixed or floating. In fact, it doesn’t even matter whether the rate is high or low, because if you don’t carry a balance you don’t pay interest.

Credit cards are best used as a convenience, not to borrow money.

To avoid interest charges and other fees, keep on top of things like the due date for your next payment. You don’t need to wait for the next statement to discover the date, since most card issuers provide that kind of information to customers who track their accounts online. In fact, many issuers, such as Wachovia (Stock Quote: WFC), offer free email services to alert the customer to payment deadlines or warn when one is getting close to the balance limit.

Many people, of course, do carry balances, especially after the big-spending periods like the holidays or summer vacation season. If you have one, or are unhappy about a card that is shifting to a floating rate, pick a strategy:

Look for another card. There still are fixed-rate cards out there. Use the shopping tool to start your search. You can use a card’s balance-transfer service to move your debt from the old card to the new.