Personal Finance

What is introductory purchase rate?

By: Johan WardUpdated: February 02, 2021

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An introductory APR rate is a rate given by credit card issuers to new customers for a specified period. This rate is low or often 0% and applies to any combination of purchases, balance transfers, and cash advances, as detailed by the issuer. Introductory rates apply to any purchases you charge to that card.

Correspondingly, what is the difference between an introductory rate and a standard purchase APR?

You may see intro APRs for purchases that last anywhere from just a few months to 21 months or more. An introductory purchase APR offer can give you a way to pay off new purchases at a lower interest rate, sometimes even as little as 0%. Once the promotional time frame ends, the regular purchase APR will take effect.

Similarly, what is an introductory incentive?

A low rate offered for financing as an incentive to apply for said financing. It also may have other restrictions; the rate may only apply to balance transfers, purchases, or cash advances. also called introductory annual percentage rate (APR) or teaser rate.

What is a 0 introductory APR offer?

An introductory 0% APR offer means that you won't have to pay interest on your purchases for a specific time period. Depending on the credit card offer, the introductory 0% APR can last anywhere from six months to over a year.

How do introductory rates work?

Introductory credit card rates are a perk issuers offer to new cardholders, usually to incentivize opening an account and using it to make purchases. The temporary rate—often a 0% annual percentage rate (APR)—may apply to purchases you make with the card or balances you transfer to the card.

Related

What's a late payment fee?

A late fee is a charge a consumer pays for making a required minimum payment on a credit card after the due date. Late fees encourage consumers to pay on time and may be as high as $27 for the first late payment and $38 for a subsequent late payment.

What is a minimum payment?

The minimum monthly payment is the lowest amount a customer can pay on their revolving credit account per month to remain in good standing with the credit card company. The amount of the minimum monthly payment is calculated as a small percentage of the consumer's total credit balance.

What happens when interest free period ends?

If the whole balance is paid off during the 0% period, no interest will be charged at all. However, purchases will start to incur interest at the standard rate if they haven't been paid off before the advertised 0% period ends, or if the credit card terms and conditions are seriously breached.

What does annual percentage rate mean?

The Annual Percentage Rate (APR) is the approximate yearly cost of borrowing money from a financial institution. It reflects the interest and/or fees assessed in conjunction with your balance and serves as a basis for choosing between similar financial products (e.g. between multiple credit card offers or mortgages).

What is the best credit card?

Best Credit Cards of 2020
  • Discover it® Cash Back – Rotating cash back.
  • Citi® Diamond Preferred® Card – Balance transfer.
  • Chase Sapphire Preferred® Card – Sign-up bonus.
  • Capital One® VentureOne® Rewards Credit Card – No annual fee.
  • Wells Fargo Propel American Express® card – Rewards.

What is a finance limit?

The term credit limit refers to the maximum amount of credit a financial institution extends to a client. A lending institution extends a credit limit on a credit card or a line of credit. Lenders usually set credit limits based on the information given by the credit-seeking applicant.

What does low intro APR mean?

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The rate is lower than the regular APR, often as low as 0%. When a credit card has an introductory APR of 0%, that means that you will not be charged any interest on purchases, balance transfers or possibly both during that period.

What is an annual fee?

An annual fee is a yearly charge by banks and financial institutions to customers for use of their credit cards. The card issuer adds the annual fee to the customer's statement.

What is the APR on cash advances?

The average cash advance APR is near 25 percent, well above the rate for purchases. Fees are typically 5 percent of the advance, with a minimum of $5 to $10. And unlike credit card purchases, there is no grace period on cash advances, so daily interest charges begin piling up immediately.

What does balance transfer mean?

A balance transfer is when you repay existing debt with a new credit card. This moves, or transfers, your balance to the new card but does not reduce the amount you owe. Instead, the point of a balance transfer is to get a lower interest rate, save money on finance charges and pay off what you owe much faster.

What is the introductory APR and how long is it in effect?

Usually, the introductory period lasts between 12 and 18 months. Once the introductory APR period is up, the interest rate will revert to the standard APR you agreed to in your card agreement.

What is a CC balance transfer?

A balance transfer is a process that lets you move debt, or a “balance,” from a credit card or loan to another credit card. It could save you money and help you simplify your payments — but watch out for fees and other potential drawbacks.

What is a penalty APR?

A penalty APR is an increased annual percentage rate that issuers may charge when cardholders are late on payments. A typical penalty APR is 29.99 percent, but it may be lower on some credit cards. The terms were implemented by the Credit CARD Act of 2009, which puts limits on penalty fees and charges.

What is an intro card?

Summary. An introductory APR is a low promotional interest rate that credit card companies often give new customers for a set number of months after they open an account. Some credit cards offer introductory APRs on purchases, balance transfers or both.

What is a pre approved credit card?

What does it mean to be “pre-approved” for a credit card? When you are “pre-approved” for credit card offers, it typically means the card issuer has determined that you meet certain criteria by doing a soft credit check, which does not impact your credit.

What does intro balance transfer APR mean?

A balance transfer intro APR is a period of time — often between 12 and 21 months — where you pay 0% interest on balances you transfer to a credit card. If you move that debt to a balance transfer card, you can make smaller monthly payments without interest for as long as the intro APR period lasts.