Introductory Rates
Many lenders offer low or 0% interest, for a time, on purchases and/or on balance transfers. Generally, these offers will apply for a fixed period (e.g. six months) or until a given date (e.g. until 31 December) after which the rate will generally be increased to the standard rate for that card. If you tend to carry a balance on a credit card then this kind of offer may save you money.
Before applying for an introductory offer, check the details in the Summary Box and make sure you understand all the Terms & Conditions, including:
- what the introductory rate covers and how it will be applied to your balance (find out if the introductory rate is for transferred balances only, or if it also covers new purchases as well)
- when the introductory period ends
- what the interest rate will be after the introductory period ends
- whether the introductory rate will end if you make a late payment or go over your credit limit
- if any other fees or conditions apply. For instance, many credit card companies now charge a fee for making a balance transfer, usually a percentage of the amount transferred. For example, if the fee for making a balance transfer is 2% and you transfer £500, then you will be charged an additional £10, which will appear on your statement. You may find that you will need to pay off your balance in full if you want to avoid paying interest on new purchases.
The Banking Code requires that your credit card company gives you between four and eight weeks notice that you are approaching the end of an introductory offer period.
Remember, these offers are usually for a limited time only. When the introductory period ends the interest rate will generally increase to the card’s standard rate.
