Introductory APR

Full definition

An introductory APR is a marketing incentive lenders use to attract new customers. The most attractive versions offer 0% APR for 12-21 months on purchases, balance transfers, or both. How the promotional period works: During the intro period, no interest accrues on qualifying balances. If you transfer $8,000 in debt and pay it all off within 18 months at 0% APR, you paid no interest at all (minus any balance transfer fee). What happens when it ends: On the day the promotional period expires, the remaining balance begins accruing interest at the regular APR - which is typically 19%-29% on credit cards. The transition happens automatically with no warning from most issuers. Deferred interest vs. 0% interest: These are not the same. A true 0% APR offer means interest simply does not accrue during the promo period. A deferred interest offer (common with store cards and contractor financing) means interest IS accruing in the background - if you do not pay off the full balance by the promo end date, the entire deferred interest amount is charged retroactively. Always confirm which type you are being offered. Using intro APR as a personal loan alternative: If you need to finance something over 12-18 months and can guarantee payoff within that window, a 0% intro APR card beats a personal loan on total cost (assuming no or low balance transfer fees). For longer payoff needs, a personal loan with a fixed rate is usually cheaper.

• APR (Annual Percentage Rate)
• Balance Transfer Fee
• Revolving credit
• Deferred Interest