Video: What are variable interest rates?


What are variable interest rates and how will they affect you? Find out in this Quick Tip video

The content on this page is accurate as of the posting date; however, some of our partner offers may have expired. Please review our list of best credit cards, or use our CardMatch™ tool to find cards matched to your needs.

If you are among the millions of Americans who carry a balance on their credit card, understanding what variable interest rates are should be, well, interesting.

Most credit cards in the U.S. have variable interest rates, which means your APR (annual percentage rate) can go up or down, depending on market rates.

But wait a minute — who exactly is this “market,” and what are they doing messing with your rate? 

Most credit card issuers peg their rates to the prime rate, though you’ll need to check your credit card agreement to know for sure. The prime rate is 3 percentage points above an interest rate set by the Federal Reserve called the federal funds rate.

Bottom line: If you hear the Fed is raising interest rates, your credit card’s APR will likely go up as well.

How soon could rates rise on your card? For that, you’ll have to spend more quality time with your card’s terms and conditions, aka “the fine print.” Some card issuers may change their APR at the start of the billing cycle after an interest rate increase — meaning your new APR may apply to purchases you already made this month. Other issuers may wait until the next quarter to change their APR.

Want to be bulletproof against interest-rate hikes? Pay off your credit card bill each month. No balance means no interest payments. Now that’s interesting.

See related:What to do if your credit card rate goes up

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

What’s up next?

In Videos

Video: Do you need a credit card RFID protector sleeve?

Thieves can theoretically capture data from your tap-to-pay card. The chance is small, but here’s what you can do about it.

See more stories
Credit Card Rate Report Updated: July 29th, 2020
Cash Back

Questions or comments?

Contact us

Editorial corrections policies

Learn more

Join the Discussion

We encourage an active and insightful conversation among our users. Please help us keep our community civil and respectful. For your safety, do not disclose confidential or personal information such as bank account numbers or social security numbers. Anything you post may be disclosed, published, transmitted or reused.

The editorial content on is not sponsored by any bank or credit card issuer. The journalists in the editorial department are separate from the company’s business operations. The comments posted below are not provided, reviewed or approved by any company mentioned in our editorial content. Additionally, any companies mentioned in the content do not assume responsibility to ensure that all posts and/or questions are answered.