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introductory rate

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Definition:

An introductory rate is an interest rate that's usually below-market and is offered for the initial billing cycle(s) of the credit card. Introductory rates commonly apply only to balance transfers and cash advances, but they can also apply to purchases. The introductory rate expires after a certain period of time, however Federal law requires introductory rates to last at least six months.

Introductory rates are attractive because they allow cardholders to pay a less in finance charges than they would on a credit card with a higher interest rate. Introductory rates are typically very low, ranging from 0% to 4% for 4 months up to 12 months. Cardholders can best take advantage of an introductory rate by paying off the credit card balance before the rate expires.

Your introductory rate can be prematurely expired if you're more than 60 days late on your credit card payment. If that happens, your credit card interest rate may increase to the default rate, which is the highest interest rate charged on the credit card.

Also Known As: teaser rate or promotional rate

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