How Long is the Promotional Rate?
Federal law requires that promotional rates must last at least six months. Some of the best credit cards have promotional rates that last up to 18 months. However, you could lose your promotional rate if you become more than 60 days late on your credit card payment. If that happens, you’ll trigger the default APR – the highest APR on your credit card – until you made six consecutive payments.
Certain Balances Get Promo Rates
Credit card issuers most commonly offer promotional rates on balance transfers, rather than purchases. If your credit card has balances with multiple interest rates, your credit card payments get tricky. The credit card issuer can apply the minimum payment however it chooses.
Paying Off Balances With Promotional Rates
Usually the minimum payment goes to the balance with the lowest interest rate. Anything above the minimum payment, must be applied to the balance with the highest interest rate. Even though you’re making progress paying off your credit card balance, you’re not getting the full benefit of your promotional rate.
To best take advantage of a promotional rate, you should pay off your balance before it expires. Otherwise, you lose the benefit of having an abnormally low interest rate. This is especially true when your promotional rate applies to a balance transfer.
Certain types of promotional rate offers, like 0% interest deals, require you to pay off the balance before the offer ends. If you don’t pay your balance in full by the time the promotion expires, you could be charged interest for the entire promotion period. Use a credit card calculator to figure out what your monthly payment needs to be to pay the balance off while you still have a low interest rate.
Beware High Post-Promotional APRs
Be prepared for your interest rate to increase significantly when the promotional rate expires. In fact, you should know what the post-promotional interest rate is going to be before you accept the offer. It may change your mind about the deal completely.