How to Use Credit Card Low Introductory Rates to Your Advantage

Published January 14, 2013 by

Many companies offer credit cards with low introductory rates in order to attract new customers. These cards are ideal for people who are planning a major purchase in the next few months and want to spread the payments out. An introductory rate is usually offered for the initial billing cycle of the credit card. The federal Credit CARD Act of 2009 requires credit card low introductory rates to last at least six months.

How Introductory Rates Work

Understanding how to use credit card low introductory rates helps you save money. Increasingly more companies offer customers very low rates for a limited period of time in order to tempt them into owning one of their cards. Depending on the offer, you can save money on interest for trips, large purchases, or balance transfers.

High interest rates are a turnoff for customers. Credit card issuers began to notice this, so they’ve started to offer low introductory rates on purchases for six months to one year. The annual percentage rate goes back to normal when the time expires. During this period, your repayments are significantly lower, which allows you to save money on your loan. Some companies offer introductory rates for up to three years.

Taking advantage of low introductory rates is a great way to save on interest. Some credit card companies offer introductory rates as low as zero percent. This offer may apply to balance transfers or purchases, but it doesn’t always apply to both. If you want to take full advantage of introductory rates, you need to make sure that the offer extends to balance transfers. It is important to understand how long the offer lasts before you decide to sign up for the agreement.

How to Use Introductory Rates for Maximum Savings

Customers can best take advantage of low introductory rates by paying off the credit card balance before the rate expires. Be careful when comparing credit card offers to make sure you understand the time frame for when the rate is available and any fees associated with the card. Pay attention to the terms of the offer. Introductory rates are dependent upon the cardholder abiding by the fine print on their contract. If you miss a payment or go over your card limit, the credit card issuer may remove the introductory rate.

If the rate applies to purchases, use the full time period to buy the things you want without paying interest. Forget about using another card or taking advantage of in-store credit offers. Avoid cash transactions or cash advances because they garner higher interest rates than balance transfers or purchases.

Customers with good credit can take advantage of low introductory rates by applying for a credit card, transferring their balance from another card to the new card, and then maintaining payments on the card for as long as the offer lasts. Before you apply for low introductory rate credit cards, make sure you have the means to pay on time. Try to determine if having this card for the long term is a good idea. Also, take into account the regular interest rate on the card.