If you’ve recently received an offer for a balance transfer or a new credit card with a low introductory rate, you may be wondering how long you can enjoy those savings. Credit card issuers provide these promotional rates as an incentive, but some specific rules and terms govern how long they last.
The Duration of Introductory Rates
Introductory rates, such as 0% APR on balance transfers or purchases, typically last for a fixed period, often between six to 18 months. Federal regulations require credit card issuers to clearly disclose the length of the promotional period upfront. They must also specify the interest rate that will apply once the introductory period ends.
What Happens After the Introductory Period?
Once the promotional period expires, the interest rate reverts to the card’s regular rate, which is often significantly higher. The ongoing rate could be fixed or variable, depending on the card terms. For variable rates, changes in the underlying index, like the prime rate, could result in fluctuations in your APR even during the introductory period.
Maintaining Your Introductory Rate
To keep your low rate for the full promotional period, it’s crucial to meet the card issuer’s terms and conditions. Specifically:
- Timely Payments: If you miss a payment by more than 60 days, the card issuer can revoke your promotional rate and apply a penalty APR, which is much higher.
- Account Standing: Ensure your account remains in good standing to avoid triggering a loss of benefits.
Can Introductory Rates Change Early?
For fixed introductory rates, the terms remain constant for the duration of the promotional period. However, if the rate is variable, it can change if the benchmark index (like the prime rate) fluctuates. This is another detail the issuer is obligated to disclose before you accept the offer.
Conclusion
Low introductory rates on balance transfers or new purchases can be a great tool to save money or pay off existing debt faster. However, carefully reviewing the terms and maintaining your account responsibly are essential to maximizing the benefits of these offers. Always be aware of when the promotional period ends and what the standard interest rate will be to avoid surprises.