Evaluating Introductory Rate Credit Cards

Many credit card offers are made more attractive by an introductory interest rate. An introductory interest rate is a low interest rate offered for the first few months after you apply for a credit card. The biggest benefit of the introductory rate is that you can enjoy little or no interest for several months. Read the fine print of introductory rate cards to make sure you’re getting a good deal.

What Does the Introductory Rate Apply To?

Introductory rates most commonly apply to balance transfers and purchases made on the card. The low rate may apply to either purchases or balance transfers, or it may apply to both. Make sure you understand which type of transaction gets the low rate. Be aware that even though balance transfers may get a low introductory rate, you’ll still have to pay a balance transfer fee that’s usually 3 to 4% of the total balance you transfer. Very rarely are introductory rates given to cash advances taken by withdrawing cash from an ATM.

How Long Does the Rate Last?

It would be great if low introductory rates could last forever. Unfortunately, these rates are just an opener. By law, all promotional rates, including 0% introductory rates, must last at least six months. Some credit cards have a longer period on the rates, as much as 18 months in some cases. The longer the introductory rate lasts, the better it is for you because it means you get to enjoy paying very little interest for a longer period of time. You’ll often need a great credit score to qualify for the longer introductory rate.

What’s the Rate After the Introductory Rate?

You should still evaluate the credit card based on the regular purchases interest rate. That’s typically one of the most important factors in a credit card decision and it’s still important when you have an introductory promotional rate. When the intro rate expires, whatever balance you have left will be subject to the regular interest rate. If that rate is high, you’ll be stuck with higher finance charges. If the post-promotional rate isn’t something you’d ordinarily choose, don’t settle for it just because of the introductory rate.

Do You Qualify for the Rate?

Not everyone qualifies for the low introductory rates advertised by credit card issuers. In fact, you may not even be approved for the low rate if you’re sent a pre-approved credit card offer for it. Introductory rates are usually given to borrowers to have good credit scores. If you have a low credit score, you may not be approved for the credit card at all, much less be approved for the introductory rate.

Using a Card With a Low Rate

When you have a low introductory rate credit card, it’s important that you be aware of when your introductory rate will end. If you don’t want to be stuck paying the higher finance charges that come with a higher interest rate, make a plan to pay off the balance before the introductory rate expires.