A promotional credit card rate or promo rate, which is often an introductory interest rate, usually lasts a minimum of six months. The promo rate is a low interest rate that is used to draw in new customers or is used to reward existing customers, who have shown responsible financial behavior.
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While credit cards with generous introductory interest rates are very attractive, it is important to remember that they come with stringent terms. The oh-so-low interest rate is set to jump astronomically from triggers such as making consistent late payments or missing a payment.
Rules of the Game: What You Should Know
Promotional credit card rates or teaser rates come with their own set of rules. It is important for you to be aware of them before you sign up for such a credit card.
According to Consumer Action, the Federal Reserve Board mandates that under the Credit Card Accountability Responsibility and Disclosure (CARD) Act of 2009, promotional interest rates will apply to existing credit card balances for least six months.
The six-month rule can be revoked if your payment is more than 60 days late, or if you fail to make your payments.
In either of the above cases, you are charged at the default APR rate, which is the highest interest rate in your agreement. If you judiciously make six consecutive payments at this raised rate, your interest rate will be adjusted downwards to your regular credit card APR.
When you are searching for introductory low interest credit cards, be aware that if you have excellent credit scores, then you are likely to find reputable credit card offers such as the Discover More offer, whose low introductory interest rate is applicable for 15 months. With some companies, the teaser rate can last up to 18 months.
Learning How Promotional Credit Card Rates Work
While promotional interest rates are offered as a means to get new customers, most credit card companies offer these teaser rates on balance transfers amounts and not new purchases. So be aware that when you sign up for such credit cards, your balance amount is being charged at different rates.
Before you sign up for a low or zero interest balance transfer credit card, make sure you consider the following elements that will help you take advantage of the offer.
Consider the balance transfer fee that will be charged by the credit card company. Try to get the fee waived or minimized.
Try not to make any new purchases on the credit card. This will allow your monthly payments to lower the transferred balance amount rather than apply towards new charges.
Read the fine print with care. Some credit card companies require you to pay off the transferred balance amount in full during the promotional period. If you are unable to do so, then the credit card company will apply a higher interest rate to the entire balance amount.
Be aware of the rate of interest that will be charged once the introductory period is over. In some cases, these rates rise so astronomically that it might not make sense for you to continue using the credit card once your balance is paid off.
The Right Candidate: Applying for Introductory Low Interest Rate Credit Card
According to CNNMoney, consumer credit card debt dropped by 11%, all across the United States in 2011. This trend reflected careful spending on the part of the consumer, and tighter lending standards on part of banks as well as credit card companies.
The CNNMoney article ends on a note of caution. It states that if debts from all sources, including credit card, auto, personal and mortgages, are added up, then consumer debt dropped a mere 1% in 2011. So the struggle with debt continues for most Americans.
If you are struggling with credit card debt and are paying a high APR, balance transfer credit cards with low introductory interest rates might be the answer for you. If you show fiscal responsibility in the handling of your new credit card, you have an amazing tool for debt reduction.
By paying off your monthly balance on time, and limiting your spending on the new credit card, you will be free of burdensome debt.
Treasure Hunt: Where to Find Promotional Rate Credit Cards
The Internet is a powerful research tool. You can look at different websites to find introductory low interest credit cards that will serve your purpose. However, beware of fraudulent offers or outrageous post-promotion rates, especially if you have poor or no credit.
An easy way to get reliable credit card offers is to use the FREE credit card chaser tool and focus on getting debt free!
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