There it is. A big fat zero in front of the “%” on an introductory credit card offer. A super-low interest rate like that can be tempting to jump at, but like any important financial decision, it’s good to get the facts on an intro rate deal so you know exactly what it will mean for you.
Q: So what is an introductory rate?
A: Let’s start with the basics. The rate refers to the APR, or annual percentage rate, which is the interest you pay if you carry a balance (what you owe on the card) each month. For an intro rate, you get a lower-than-usual APR as an incentive for signing up for a new card.footnote1
Q: How low will my intro rate be?
A: Most people think of 0% when they hear “introductory rate,” but intro rates can vary, usually between 0% and 9.9%.footnote2
Q: Why is it called an introductory rate?
A: Like any introduction, an intro rate doesn’t last forever—it’s a limited-time offer. When the intro period is over, your APR will change to a higher rate. If you’re carrying a balance on the card when the intro rate expires, you’ll start paying more interest on that balance.footnote3
Q: So how long will it last?
A: Typically, introductory rates last between 6 to 18 months.footnote4 If you take advantage of an intro rate, be sure you know when it will end—and that new, standard rate will begin.
Q: Do introductory rates have restrictions?
A: Often, yes. Sometimes, the rate only applies when you make a purchase, or when you transfer a balance to the new card.footnote5 For some cards, the intro rate applies to both. But most of the time, these zero-to-low interest rates don’t apply to cash advances.
Q: Do I get a grace period?
A: Usually. Many new cards—whether they offer an intro rate or not—come with a grace period that lets you avoid interest charges on new purchases. But remember, a grace period only applies if you pay your credit card balance in full on time every month.footnote6
Next time you see that zero (or another lower-than-usual number) on an introductory rate, you’ll know why it might be a helpful tool. But you’ll also know to get all the details—including how long the rate lasts and when you can use it—before you decide to apply.