Introductory APR
Introductory APR refers to a temporary, lower-than-standard interest rate offered by credit card issuers for a set period after account opening, typically applying to purchases, balance transfers, or both. This is evaluated within APR, Interest & Fees.
Plain-Language Meaning
An introductory APR is a special interest rate that credit card companies offer for a limited time when you first open a new account, often much lower than the regular rate.
Practical Example
If you open a new credit card and it advertises a 0% introductory APR for 12 months, you will not be charged interest on purchases or balance transfers during that period, but after 12 months, the regular APR will apply to any remaining balance.
What It Does Not Mean
Introductory APR does not refer to the permanent interest rate on a credit card, nor does it apply to all transactions indefinitely; it is a temporary promotional rate that eventually expires.
How the System Interprets It
The system interprets introductory APR as a time-limited promotional rate that affects how interest is calculated on eligible transactions during the specified period, after which the standard APR terms automatically take effect.
Common Misconceptions
- “Introductory APR lasts for the life of the card.” The introductory APR only applies for a set promotional period, after which the regular APR is charged.
- “All transactions qualify for the introductory APR.” Only certain types of transactions, such as purchases or balance transfers, may be eligible, depending on the card’s terms.
- “Missing a payment does not affect the introductory APR.” Missing payments can result in losing the introductory APR and being charged a higher penalty rate.
Related Pages
Related Glossary Terms
FAQ
- What happens when the introductory APR period ends? When the introductory APR period ends, any remaining balance on the card will begin to accrue interest at the card’s standard APR as specified in the cardholder agreement.
- Can the introductory APR apply to both purchases and balance transfers? Some credit cards offer introductory APRs on both purchases and balance transfers, but others may limit the offer to one or the other; the specific terms are outlined by the issuer.