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34.9% APR Representative (variable)
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Introductory rate or teaser rate?

Credit card providers offer introductory rates on credit cards in order to attract new borrowers. You could say the rate is a ‘thank you’ for choosing that lender.

You may be offered an introductory rate or see them advertised when you apply for a credit card. These rates are also known as ‘teaser rates’ – and it’s easy to see why, as some start from as low as 0%.

Read on to find out more about the introductory rates available.

“Having 0% interest on purchases allows you to spend on your new credit card without having to pay any interest at the end of each month...”

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Different types of introductory rate:

0% balance transfers

A balance transfer lets you move your existing credit or store card debt or debts over to a different credit card provider. If you’re currently paying off balances on several different cards, all with different interest rates, moving these balances to one card and swapping multiple bills for one monthly payment can make budgeting a lot easier.

There’s another advantage though; if you can find a balance transfer card with a 0% introductory offer and you know you can afford to clear your balance within the time this is available for, you could save money. The 0% period may last for a few months or it may run for a full year, and the one you choose will partly come down to the size of the balance you plan to transfer on to it.

If you move your current debts on to a card with a 0% interest introductory period, the payments you make each month will solely go towards clearing the debt and not on interest. Providing you’re able to pay off this balance in full before your particular introductory period ends, you won’t have to pay a penny in interest.

And if you can’t clear your balance in time, you could consider transferring the remaining balance on to a brand new 0% balance transfer card – although there’s no guarantee you’ll be accepted. Because of this you should do all you can to clear as much of your balance as possible while the rate stands at 0%.

Do bear in mind that most providers charge a fee of around 1-3% of your debt to transfer it to the new card. But if you are paying out a lot in interest on your current credit card, the savings may outweigh this initial cost – so do your maths to work out if it’s worth applying.

0% interest on purchases

If you’re not planning to use a credit card to help make your existing debts more manageable, 0% on balance transfers is unlikely to entice you to switch lender. However, an introductory offer that gives you 0% on purchases might.

Having 0% interest on purchases allows you to spend on your new credit card without having to pay any interest at the end of each month. So long as you make at least the minimum repayment on time every month, you’ll be able to enjoy interest-free purchases for the duration of the introductory rate.

But you must remember to clear your balance before the introductory rate ends, because once it does it could switch to the lender’s own rate – and this might be quite high. As with a balance transfer card, you could switch to a new 0% deal credit card when your current deal ends, but you’ll need to make sure your credit history is shipshape to qualify for the best offers. Make a note of the date your current deal ends so you can start shopping around for a new card in good time.

Regardless of whether or not you choose to switch once your introductory deal on purchases comes to an end, you can save money on interest by clearing your balance in full each month, so only spend what you can afford to pay back. That way you won’t have to pay any interest – and it also looks good on your credit history.  

Read part 2 of our guide to find out what kind of introductory rate is best and whether you'll be eligible.

Know if you're accepted before you apply with QuickCheck

  • Get credit - up to £1,500
  • QuickCheck won’t affect your credit rating
  • Get a fast response in 60 seconds

34.9% APR Representative (variable)
Intelligent Lending Ltd (Credit Broker). Capital One is the exclusive lender

Check Now