There are a lot of credit card promotional rates in the market available to consumers. There are so many choices that many get confused and overwhelmed. Some credit card companies have also taken advantage of consumers by luring them into deals that aren’t always clear and fine print that isn’t easily understood.
Like all financial products and purchases, you should choose a new credit card with a promotional rate that serves a purpose. Do you need to transfer balances amongst cards? Do you need to consolidate your credit card debt? Are you look to save travel reward points or airline miles?
Promotional interest rates for credit cards can be a great tool to help you take better control over your finances and save money. But, you have to be careful with the deals you sign up for and read the fine print for credit card company’s promotional interest rates. There are often a lot of stipulations that you should be aware of before you sign on the dotted line.
Understanding the Fine Print
There’s a lot of fine print that’s associated with introductory interest rate offers from credit card companies. There are terms such as introductory rate, introductory period, and balance transfer fees that you should understand as well.
The introductory rate is the initial low rate, which may be even 0%. The introductory rate is what credit card companies use to lure you to them with either a new card or a balance transfer. An introductory rate may also eliminate or significantly reduce your monthly finance charges, which can help you pay off your credit card balances faster. Typically, the introductory rate is only good for a certain period.
The introductory period is the amount of time that your new, low rate lasts. The low requires credit card companies to maintain promotional interest rates for at least six months. But, consumers with good credit can often find introductory interest rate promotions that can last as long as 18 or 24 months.
Balance Transfer APR
You should look at the balance transfer APR that takes affect once the introductory period expires. In some cases, the balance transfer APR may be the same as your regular purchases APR. You’ll want to take specific note of what your new rate is after your promotional interest rate period ends.
Balance Transfer Fee
Most credit card companies charge consumers a balance transfer fee in addition to their introductory offer. Balance transfer fees can range from 3% to 5% of the amount you transfer to your new credit card. Be sure that you consider this fee when applying for a new credit card. You don’t want the balance transfer fee to eat up the amount of savings that you’ll enjoy with the new introductory offer.
Interest Rate Promotions Can Be Deceptive
The federal government often warns credit card companies against deceptive marketing of their interest rate promotions. The credit card companies often use interest rate promotions to lure consumers with zero or low-interest rates if they switch credit cards. Then, they often hit card users with surprise interest charges after a certain amount of time or if they’re late with a payment.