When Does the Interest Clock Start Ticking? Issuers can charge interest on purchases from the date of posting the date the charge slip reaches your card issuer and is placed on your account. The current trend, however, is for issuers to charge from the date of purchase, adding anywhere from one day to several days' interest to their coffers. 

Minimum Payments: Credit card minimum payments have been shrinking to the point that it's not unusual to see a minimum payment of 2 percent of the balance due (and that was unusual not that long ago!). At that rate, it will take a long, long time to pay off a balance. While low minimums can be a bonus when cash is tight, they also make it possible to run up very large balances that may, in reality, be unaffordable.  

The Fixed-Rate Credit Card That Isn't: When you take out a fixed-rate mortgage, you know what the rate will be for the entire life of the loan. When you take out a fixed-rate car loan, you know that the interest rate will be the same on the first payment as the last. When you take out a fixed-rate credit card, it's an entirely different story. 

Variable-Rate Cards: Just like with mortgages, a variable rate means the interest rate is tied to another interest rate in the economy, and will change if that interest rate changes. 

Every card issuer that offers a variable-rate card is free to decide how it's going to compute the rate. One, for instance, may determine the rate by adding 5 percent to the prime rate as listed in the Wall Street Journal. Another may choose to tie the rate to the federal discount rate. 

Most variable-rate cards change rates quarterly but some do semiannually it is up to the card issuer to decide. Information about how the variable rate is determined, and when it changes, has to be disclosed up front in applications and solicitations. According to CardTrak.com, most variable-rate cards have interest rate "floors" below which the interest rate cannot go, even if the index rate goes lower. If rates dip very low, as they did in 2001, consumers may be better off getting a lower-rate card elsewhere than sticking with a bottomed-out variable rate. 

Tiered-Rate Cards: A few credit card programs offer tiered rates: The interest rate depends on the balance on the card. For example, a tiered card may charge 17 percent on balances up to and including $1,000, and 13 percent on balances above $1,000. This rate structure is designed to reward higher balances and make more money off lower balances. Tiered-rate cards are usually not good deals because they "reward" customers for going deeper into debt. 

Different Rates for Different Balances: Many cards now charge different rates for different balances. There may be a lower rate for the balances you transferred from another card during a promotion, for example, or another rate for cash advances. If you have balances subject to different interest rates, your issuer will print an "effective" rate on the statement, which is basically an average of the different rates you are paying. 

A caution: All issuers allocate payments to the lowest-rate balance first. That means you'll be wiping out the cheapest balance first. This is directly contradictory to the most common advice for paying off debt, which recommends you pay off your highest-rate balance first. Consider yourself forewarned. 

Teaser Rates: 5.9 percent or even 0 percent interest sounds great. And it can be. But remember: Card issuers would not continue to offer teaser rates if they weren't profitable. Many teaser rates just don't last that long. Six months sounds like a long time, but by the time you've completed the transfer (which can take a few weeks), you may not benefit from the new rate that long. And if you don't find a new card or negotiate a better deal, you may be stuck with a higher rate than you need.  

So which do you choose: a fixed-rate, variable-rate, or tiered-rate card? It really doesn't make a difference whether you choose a fixed-rate or variable-rate card, since neither is completely stable. So far, there have been no studies that tell whether fixed or variable-rate cards change rates more dramatically. We think it's a matter of finding a bank that has a general reputation for charging low rates (fixed or variable) and hoping they don't decide to suddenly change their marketing strategy. Whatever you choose, you are taking something of a chance. The exception are cards from Arkansas banks, where state law keeps rates very low. If you can get one of these cards, you know the rate will be good as long as that law's in place! 

When Your Account Changes Hands 

It's true that the big banks keep getting bigger at least in the case of credit card issuers. Credit cards are so profitable for banks that "do it right" that many of the larger banks want to get more and more customers. Sometimes, they'll just buy them from other issuers. 

Card issuers have to give you fifteen days' advance written notice before changing the terms of the credit card. This is also true if a bank buys another bank's cards and raises any of the costs. In addition, individual states may have laws that cover banks located in that state.