Introductory Rate

Full definition

An introductory rate is a promotional interest rate that applies for a limited period at the start of a credit account or loan. After the introductory period expires, the rate resets to the ongoing standard rate, which is typically much higher. Credit card context (most common): 0% introductory APR offers on purchases: no interest for 12-21 months on new purchases. 0% introductory APR offers on balance transfers: no interest for 12-21 months on transferred balances, usually with a 3%-5% balance transfer fee. After the intro period: rate resets to the standard purchase APR, typically 20%-29.99%. Deferred interest variant: some retailer cards do not truly waive interest during the promo period - they accrue it and apply it all retroactively if the balance is not paid in full by the deadline. This is not 0% APR - it is deferred interest, and the difference can be significant. Personal loan context: Standard personal loans do not have introductory rates - they carry a fixed APR from origination through payoff. However, some variable-rate personal loans (less common) may offer an initially lower rate that adjusts over time. HELOC context: Home equity lines of credit sometimes have a draw-period rate that is lower than the repayment-period rate. This is functionally a form of introductory rate for the draw period. Borrower strategy for credit card 0% offers: Useful for large purchases or debt consolidation if you can pay the balance in full before the intro period expires. Calculate: take the total balance, divide by the number of months in the intro period - if you can make those monthly payments, 0% APR is better than a personal loan. If not, a personal loan with a fixed lower rate for a longer term may be the better choice.

• Variable Rate
• Deferred Interest