The credit card introductory APR rate is a very effective tool to lure credit card users to open new accounts and then transfer existing balances to that new low interest balance transfer credit card. APR stands for Annual Percentage Rate and is the actual percent you will pay in interest on the outstanding balance of your credit card each month. Credit card interest is not simple APR. As each month passes the interest is added to the principal and new interest charges applied, so the percent of interest you pay is actually compounded.
Techniques of Attracting Customers
There are a large number of companies in the credit card industry. They each offer something different in terms of trying to attract customers. Some offer credit cards to practically anyone, no matter how bad their credit score is. Others offer rewards programs and point systems redeemable for a variety of products and services. Still other companies stand by the premise that they have the best introductory APR, which will save cardholders money when they transfer balances. Quite often this is a big attraction for many people, especially those with balances on other cards that they would like to pay off.
What Happens Later with Introductory APR Rates
Introductory APR rates are just that, introductory. These low rates do not remain that way for long. Typically, they last for about 6 months, although you can occasionally find ones that will last longer, even up to a year. However, there are others that are as short as 3 months. When the term is up, the APR rises to its normal rate, which may or may not be a favorable one.
Before opting for a credit card with a low introductory rate, you should always make sure you are aware of the regular rate that will take effect once the introductory period ends. Read the fine print to learn about the conditions of the introductory rate. Often you will find that if a payment is late during the introductory period or beyond that time, the interest rate you pay will rise significantly as a penalty. Even how you pay your other credit cards may impact the introductory rate.
As you begin to use your new credit card with the great new rate, knowing the terms of the deal are also very important. New purchases may or may not be at the low rate. If the introductory rate is just for transfers, all new purchases using the card are at the regular rate. When you make payments each month, the credit card company typically applies it towards the amount with the lower rate.
Introductory APR Rate Credit Cards are a Good Fit
For many people, credit cards with a low introductory APR are a good fit. If you are planning a big purchase, such credit cards can save you a lot of money. For anyone who is carrying a large credit card balance they are planning to pay off within the timeline of an introductory rate, this type of card can also save them quite a bit of money. Often another card that you are carrying a balance on is charging 24% or more interest. If you transfer that balance to a zero interest or very low interest introductory rate, you save serious money on interest charges.
There are many people who make a habit of getting new credit card after new credit card, transferring the balance each time to take full advantage of introductory rates. While this may seem like a good idea, it is actually harmful to your credit score. Having a credit history with the same credit card company for an extended period of time is a good thing for your credit report. For this reason, it is important to learn the actual APR prior to taking out a new credit card, so you can plan to keep the card and use it beyond the introductory period.
When you are ready to find the low introductory APR credit card or other type of credit card that best meets your credit needs, the Credit Card Chaser above can help. You will simply have to answer a few questions about the type of credit card you would like to have and your spending habits. The free credit card chaser tool will find the best options to fit your needs – whether it is a low interest rate credit card offer or a balance transfer credit card offer or even something totally different like a hotel credit card offer. You can quickly and easily compare all the different choices you have, because all the work is done for you. Get started today and let the Chaser track down your next credit card!
- Credit Card Calculators
- What are the lowest rate credit cards?
- First Community CU of Houston Visa Platinum Credit Card
- Municipal Credit Union Visa Gold Credit Card
- Should I Transfer My Credit Card Balance?
- What are some fixed credit cards?
- Is there such thing as no fee balance transfer credit cards?