In a competitive environment, many banks will offer you a special terms to compete for your business. They may offer you special retail incentives, or airline miles, or special deals on interest rates. One of the ways they can try to win you business is by offering what are known as introductory interest rates.
In order to lure your business, many credit card companies will offer what are called introductory credit card interest rates. An introductory rate is a low rate of interest sometimes even 0% - which lasts for a short amount of time. This teaser rate can last for several months or a year, depending on the terms of your agreement.
There are many advantages to choosing a card with a low introductory interest rate. For instance, with a low introductory rate, or even 0% interest for the first six or twelve months, you can transfer your existing balance to a new card and begin a grace period of low or non-existent interest rates. For the savvy consumer, this strategy is an excellent way to reduce credit card debt, because it gives you a chance to start paying down a high credit card balance without incurring a fortune in finance charges.
However, you should be sure to read the fine print to understand what you are accepting along with an introductory credit card interest rate. After the introductory interest rate expires, your terms will change and your interest rate will go up. If your introductory rate is contingent on a credit card balance transfer, there may be associated charges such as a transfer fee. Also, youll want to make sure that the interest charged at the end of that introductory period is only on the remaining balance, and not retroactively applied to the total amount transferred to the card. Always be sure that you have read the terms and conditions so you know what to expect.
Also, its important to plan ahead and know how long your introductory interest rate will last. If you find out your interest rate is in effect for only three months, it is wise to pay off as much of your balance as possible, or look for another card. If you have a good credit score (700 or above) you may be entitled to get a good rate on another card from the same company, as credit card companies always want to retain good customers.
