Taking Advantage of Introductory Rates

Many consumers have encountered offers for credit cards that advertise “low introductory rates.” By understanding the basics about credit card introductory rates, you can determine how to best use them for your own purposes.

What Are Introductory Rates?

Introductory rates are low interest rates offered by credit card companies. The introductory rate, or APR, is an incentive to apply for the card. Typically, introductory rates last for a predetermined period of time.

Introductory rates are also called “teaser” rates.

What Are The Benefits of Introductory Rates?

Obviously, a low introductory rate can save you money in the short term. Many cards have no balance transfer fees or 0% introductory fees. These can add up to a significant savings.

What Are The Risks of Introductory Rates?

It is important to be aware that most introductory rates also come with risks.

Many introductory rates expire quickly. Most expire within six months. You should be aware of the new rate, since the rates on these cards are typically higher than you may expect.

If you switch to an introductory rate card, you should be aware of the balance transfer fee if you transfer the balance of your old card. Any fee may negate your savings.

You should also make sure you are aware of the grace period. Many introductory rate credit cards immediately switch to the regular rate if you are late on a payment.

Managing Introductory Rates

Introductory rates can offer you an opportunity to save money with a new card. However, you should be aware of the risks and potential costs introductory rates may entail.

This article is part of TakingCredit.com’s credit card glossary. You can learn more about credit through our archive of credit card tips and our credit card blog. Photo by Aidan Jones.