A favorable interest rate that applies during a special promotion. The period of time from the day an account is opened until the promotion expires is called the intro period. When the intro period expires, the interest rate may increase.
An intro rate is a favorable interest rate that applies during a special promotion. The period of time from the day an account is opened until the promotion expires is called the intro period. When the intro period expires, the interest rate may increase. Introductory rates are usually set below normal interest rates and may be offered only for a short period at the beginning of the loan or credit line. Lenders may use this special rate to attract borrowers.
Introductory rates are also been known as teaser rates. A lender may advertise a very low rate in hopes of enticing more borrowers to use their services. What they don’t advertise is that this low intro rate may only be available for people with top-notch credit scores and that it may only be available for a short amount of time. Once that intro rate is over, borrowers might find that their interest rate dramatically increases, and they owe a great deal more money than anticipated. Contact the lender to see how long the intro rate lasts and find out what the interest rate will be after that time period. You may find that what seemed like a deal too good to pass up is actually going to cost you a great deal of money.
If it seems like the intro rate on a loan or a line of credit is worth your while, it may be a good idea to make a solid plan and go for it. For instance, if a credit card company offers you zero percent interest for a year and you need new furniture, make a plan to have your big purchase paid off by dividing the total by 12, so you know how much to pay each month. If you don’t make any more purchases with your credit card, you will have your furniture paid off without the added financial strain of paying interest.
