A hallmark of your credit card was that your interest rate was always fixed. Well let me correct that you had a fixed introductory rate. Then you had a new fixed rate until you made a late payment. Then you had a very high fixed rate (the default rate) for making that late payment.

Then when the financial crisis hit the company likely changed your interest rate again to a new higher interest rate regardless of what rate you were paying before. And now you can forget all I just wrote because the industry is again changing your cards and giving new cards variable interest rate.

Now instead of fixed 17.99% your interest rate will say something such as "prime + 13.99%" meaning you will pay at least 13.99% (or whatever percentage the company decides to make it) and then the current Federal Reserve Prime Rate.

However, do not be surprised if instead of a fixed rate plus the prime that the Company has offers a fixed range for example 8.67% to 17.47%. The range is just another method through which the company will try to maintain a high rate of return for itself. Through this method when your balance is paid off your interest rate can be the low end of the range plus prime, but when you have a balance due the interest rate will magically shift to the high end of the range.

It is enough to make one wonder why Credit Card companies do not merely set the interest rate at the typical default rate of 29.99%. At least then a consumer would know their rate and could choose whether it is worth it to have a credit card. Enough with these hide the ball tactics on interest rates and how those rates are calculated.

"Too Much Credit" created by Flickr user Andres Rueda, used under Creative Commons Attribution-Noncommerical 2.0 license.