Credit cards can definitely make your life easier, especially when it comes to finances. These let you pay for essential expenses in advance and repay your credit card company when you have the money.
When you are shopping around for the right credit card for your lifestyle, you are bound to encounter unfamiliar concepts, such as APRs, balance transfers, and other such terminology.
One of the concepts that is easy to understand is the introductory interest rate. Keep reading to know more about this important element of credit cards.
What Is It?
In order to determine what an introductory interest rate is – we need to discuss what exactly interest and interest rates are. The interest rate is the percentage at which the lender charges you for the use of its assets. The interest is a portion of what you owe the lender.
With credit cards, you will only be charged interest if you go over the due date without paying the entire debt. If you have a remaining balance after the due date, your debt will accumulate more interest.
Interest rates are usually expressed yearly or in the form of annual percentage rates (APR). Given this definition of interest and interest rate, you can understand that an introductory interest rate is the promotional APR offered to new cardholders.
This means that you can enjoy a special APR, but only for an introductory period, usually in the form of a 0% offer.
What to Consider When Taking an Introductory APR Offer
The thing about such offers is that they are there to attract customers and persuade them to get a credit card from the company. However, you need to be aware of what it means to your card usage. Here’s what you should consider when faced with such offers.
Introductory Period
As mentioned, these offers just last for a promotional period. For example, some companies let you enjoy interest-free purchases for the first 12 months. After this period, you will be charged using the agreed-upon APR.
You should take note of the introductory period to avoid going over this duration without repaying your credit card debt. This way, you can avoid incurring interest on your spending during the first few months of your card ownership.
Also read: 3 Credit Card Fees to Look Out For
Terms and Conditions
Some lenders only let you enjoy the promotional offer if you can fulfill the conditions needed to shop interest-free. For example, your spending can only be considered interest free if you spend a certain amount of money.
So, if you are looking to enjoy the introductory rate, you will need to meticulously consider the terms and conditions of the offer.
Your Spending for the First Few Months
This point relates closely to the points above. You need to plan your spending for the first months of your card ownership if you are planning to take advantage of this offer. You will not be able to enjoy the special rate if you will not be using your card during the period.
If you imagine yourself making significant purchases during the first few months, then cards with introductory rates will be up your alley. Just make sure that you can repay your debt before the introductory period is over and you are good to go.
The Bottom Line
Using your credit card wisely means knowing how to take advantage of special offers that come with your card. If you are considering one with introductory interest rates, then you should definitely consider these factors.
