introductory APR
A promotional low or zero interest rate offered for a limited time on a new credit card.
Example
“The 0% introductory APR for 18 months gave her time to pay off the transferred balance interest-free.”
Memory Tip
INTRO APR — temporary. Know exactly when it ends and what rate follows.
Why It Matters
Understanding introductory APR helps you maximize savings on credit card debt and plan your repayment strategy. Knowing when the promotional rate expires allows you to make informed decisions about whether to pay off balances before higher interest rates kick in or transfer balances to another card.
Common Misconception
Many people assume the introductory APR applies to all transactions on the card, but it often only covers balance transfers or purchases, not both. Additionally, some believe the low rate lasts indefinitely when in reality it is strictly limited to a specific promotional period that can be as short as a few months.
In Practice
A person receives a credit card offer with 0 percent APR on purchases for 12 months and immediately makes a 5000 dollar purchase. If they pay 416 dollars per month, they will eliminate the debt before the promotional period ends and pay no interest at all. However, if they only pay 300 dollars monthly, they will still owe 1400 dollars when the 12 months expire, and the remaining balance will then accrue interest at the standard rate of perhaps 18 percent APR.
Etymology
Modern credit card marketing term — a temporary rate to attract new customers.
Common Misspellings
Check your credit score free — no impact
Related Terms
More in credit
Other credit terms you should know
See Also
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