What Is Intro Apr on a Credit Card?

If you're a new credit card user, you've probably been offered an introductory APR (annual percentage rate).

The APR is the rate of interest you’ll pay on your outstanding credit card balance.

The crucial difference between the APR and the interest rate is that the APR includes all the extra fees that you might not have otherwise thought about.

This rate can be variable or fixed, but in most cases it's variable. That means that the APR can change over time, typically in response to changes in the prime rate.

An intro APR, on the other hand, is a promotional interest rate that credit card issuers offer to new cardholders.

This introductory rate is usually lower than the standard APR, and it applies to purchases and balance transfers made during the introductory period.

The intro period is typically 12 months, but it can range from 6 to 21 months. After the intro period ends, the APR goes up to the standard rate.

0% Intro APR Explained

As the name suggests, 0% intro APR means that you won't have to pay any interest on your purchases or balance transfers for a specific period of time.

If you get this tempting offer, you'll be able to borrow money at no cost, for some time, usually between 12 and 18 months. 

The good news is that you won't accrue any interest during this time, so you can fund that large purchase or catch up on old debt.

The not-so-good news is that you’ll have to start paying interest on the borrowed amount as soon as the 0% introductory APR period comes to an end. 

Now that you know the answer to the question above, you might be wondering whether there’s such a thing as a lifetime 0% APR.

Unfortunately, that’s never going to happen. If you see an offer that promises it for the life of the balance, it's likely a scam.

A much more realistic scenario is an introductory 0% APR period followed by a much higher regular APR. 

How Intro APR Works

When you use your credit card during the intro period, you'll enjoy a low or zero APR on purchases and balance transfers for a set period of time.

For example, let's say you're offered an intro APR of 0% for 12 months on purchases. Knowing what intro purchase APR is can be of great help here: it’s the interest rate applied to credit card purchases for that limited period at the beginning.

If you spend $1,000 on your card within the first month, you'll only have to pay back the $1,000 – you won't accrue any interest charges during that time. 

After the intro period ends, the APR will go up to the standard rate. So, if you haven't paid off your balance by then, you'll start accruing interest on the remaining debt.

This is why it's essential to know how long the intro period lasts and to make a plan to pay off your debt before the intro APR expires.

Things to Consider Before Accepting the Offer

Before you sign up for a new card, there are a few things you should keep in mind.

Fees

Most intro APR offers come with a balance transfer fee. This is usually around 3% to 5% of the amount you're transferring.

Spending over the limit or late monthly payments can also trigger fees. So even though you're not being charged interest, you could still end up paying other fees.

Additionally, a credit card issuer may charge an annual percentage rate for your credit card. Make sure you factor this in when you're considering an intro APR offer.

Regular APR

When the introductory period ends, you'll be stuck with the regular APR, which is typically much higher than the intro rate. So, if you're not able to pay off your balance in full before the time expires, you should look for a card with a lower regular APR and good rates.

Timeframe

Different cards offer intro APR periods of different lengths. Some may be as short as six months, while others could last for 21 months or more. If you're not sure you can pay off your debt within the intro period, look for a card with a longer intro APR offer.

Credit Card Type

There are two main types of credit cards: rewards cards and cash back cards.

Rewards cards offer points, miles or other perks for every dollar you spend.

Premium cash back cards give you a percentage of cash back on every purchase.

If you like traveling, you’ll be better off with a travel card, while cash back cards are better for everyday purchases. 

Perks of Intro APR

Having a credit card with an intro APR can be a life-saver, especially if you find yourself in debt or want to finance a large purchase.

Boosting Your Savings

If you have a high interest rate on your credit card, you may be paying hundreds of dollars in interest every year. An intro APR can help you save money by giving you a break from interest charges.

Flexibility

An intro APR can also give you some flexibility when it comes to making big purchases.

If you know you won't be able to pay off the balance right away, you can use an intro APR card to finance the purchase and spread out the payments without paying interest.

Faster Debt Payouts

Even if it's not quite zero, an intro APR can be used to transfer balance from a high-interest card to one with a lower interest rate, thus helping you pay off your debt sooner.

Check the balance transfer fee before you make a decision, as these can offset the savings you'll get from the intro APR.