Is a Promotional Interest Rate Right for you?
Credit card companies know just how to pull us in. Promotional interest rates, also known as “teaser rates,” are a common reason many of choose to apply for a card. But are these promotional rates all they’re cracked up to be?
The answer is decidedly both yes and no.
Promotional rates can be quite beneficial for many credit card customers who are looking to pay off debt or make large purchases. However, to make a low promotional interest rate worth your while, you need to make sure you can pay off the debt within the time frame of the promotional rate. And that time frame is typically between 6 and 12 months for most credit card companies.
If you are unable to pay off your debt within the promotional interest rate time frame, expect to see a dramatic increase in your interest rate, which means a dramatic increase in your monthly finance charges. Some credit card customers simply switch to another promotional rate credit card once their current card’s promotional rate has expired, but that may be tricky, particularly if your credit rating has recently slipped.
Which brings up another point: don’t expect to snag a great, low, promotional rate unless you have excellent credit.
A low, promotional rate should also not be a time when you freely charge purchases because of the low interest rate, as this could create a credit card balance which you can’t pay off before the promotional rate ends. It is therefore extremely important to not view your low, promotional interest rate, as a green light for making expensive purchases.
Finally, it is important to remember that promotional rates may only be applicable on balance transfers or future charges; it is therefore important to read the details of the promotional rate before applying for the card.
Many balance transfer promotional rates come with a balance transfer charge, which can prove to be quite costly, depending on the balance amount you are transferring. Therefore, you will need to decide if a promotional rate is worth your while, considering the card’s balance transfer fees.
Related posts:
(No Ratings Yet)
Loading ...
