What is introductory APR?

There it is. A big zero in front of the “%” on an introductory credit card offer. A super-low interest rate can be tempting. But like any important financial decision, it’s good to get the facts on an introductory APR deal so you know exactly what it will mean for you.

Here are some things to know about how introductory APR works and how you might be able to use it to help meet your financial goals. 

Annual percentage rate (APR) refers to the interest rate—stated as a yearly rate—that credit card companies charge if you carry a balance. And the definition of introductory APR is a lower-than-usual APR that you get for a set period of time when you open an account. Intro APR may apply to a card’s purchase APR or balance transfer APR or both.

Introductory APR doesn’t last forever—it’s a limited-time offer. When the introductory period is over, your standard APR will apply. If you’re carrying a balance on the card when the introductory APR period expires, you’ll start to see the card’s standard rate applied to the balance.

Introductory APR periods must last at least six months. But they can extend longer, too. If you take advantage of introductory APR, be sure you know when it will end and when the new, standard rate will begin. 

Remember, intro APR may apply to a card’s purchase APR or balance transfer APR or both. It depends on the offer.

For example, say a card offers a 0% introductory APR for both qualifying purchases and balance transfers. That means you won’t have to pay any interest on qualifying purchases or balance transfers for the introductory period. 

Keep in mind that introductory APRs aren’t always 0%. You might think of 0% when you hear “introductory rate,” but introductory APRs can vary.

Cards with introductory APR offers might have restrictions and fees you should know about before applying. Getting all the facts about the offer can help you find a card that you can use to help meet your financial goals. 

Here are some things to consider when looking at introductory APR offers: 

What qualifies

Make sure you understand what the introductory APR applies to. One card’s introductory APR might only apply to balance transfers and not purchases. Another might have the opposite policy. Or the introductory APR might apply to both. Most of the time, these introductory rates don’t apply to cash advances.

Fees

Just because there’s an introductory APR offer doesn’t mean there are no fees. For example, some cards might charge a balance transfer fee. So if your goal is to pay down your debt by transferring another credit card’s balance to a lower-interest card, make sure you take the fees into account.

There might also be fees and penalties for things like late payments.

Penalty APR

If you make a late payment or miss a payment altogether, you might lose your introductory APR. And in some cases, your card might charge a penalty APR after a late or missed payment, which is likely much higher than the standard APR that kicks in after the introductory period.

Grace periods

Many new cards—whether they offer an introductory APR or not—come with a grace period. A grace period is a length of time when you may not be charged interest on your credit card purchases. If your card has a grace period, different factors might impact whether the grace period applies to a purchase—like whether you’ve paid your previous balance in full by the due date each and every month.

You can check your credit card’s terms and conditions to see whether your credit card has a grace period. And keep in mind that most credit cards don’t provide a grace period on cash advances or balance transfers.

Introductory period

Make sure you know how long the introductory APR lasts. If your goal is to pay off your entire balance before it ends, it could be a good idea to make a budget.

Now you know the basics about how introductory APR works. But why does it matter? And how can it help you accomplish your goals? Here are two ways you might use a low introductory APR:

Pay down debt faster

You might consider a card with a low introductory APR if you’re transferring a balance. Balance transfers can help you consolidate credit card debt and simplify your monthly payments.

Balance transfers are pretty simple: You move your debt from one credit card with a higher interest rate to another with a lower interest rate. When your debt is accruing less interest, your payments may result in the debt being paid off faster.

Keep in mind that you can’t transfer balances between cards from the same issuer. And balance transfers might have fees attached. So make sure you know if you’ll be charged—and how much—before you make your decision. 

Pay for large purchases over time 

You might decide to open a low-interest credit card to pay for large purchases like furniture, electronics or appliances.

And if you stick to a budget, you could even pay off the entire balance before the introductory period ends. That way, you don’t have to worry about paying the standard interest rate on your purchase at all. 

Next time you see a zero—or another lower-than-usual number—on an introductory APR, you’ll know more about how it works. And you’ll also know to get all the details—including how long the rate lasts and what it covers—before you decide to apply. 

You can explore Capital One’s low APR introductory rate credit cards to learn more about their terms and benefits.