Think Long and Hard Before Using a Promotional APR

By Lisa Rowan

 

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Zero-percent interest offers for credit cards are so common now that I usually just delete or toss them. Surely, another one is right around the corner, should I desire it, since my credit is solid. But they’re always just a little bit tempting, these offers to incur zero—zip, zilch!—interest for six, or 12, or 18 months on new purchases. Alternately, these offers provide the opportunity to transfer a balance from a higher-interest card to theirs, for an interest-free respite of several months.

In smaller print is the catch: When the 0% interest period ends, your rate for any balance you have left is going to shoot back up to 18-22%. If you’re not downright religious about paying off your balance every month, these offers can be tricky to navigate. Sometimes trickier than they are worth.

But a new type of credit card offer dropped into my inbox a few weeks ago. One I hadn’t encountered before. One for an interest rate that had not entered my orbit in at least a decade.

Behold the kind, generous offer: I can enjoy 8.99% interest on new purchases made made from June 1 right up to the start of the holiday shopping season. On December 1, my interest rate will return to the norm for me, which right now is 18.24%. There’s no sneaky deferred interest here that can plague some other credit offers, but I will have to pay the higher interest rate on any new purchases that have balances remaining at the end of the promo period.

I knew what this was: a clever tactic to get me to spend more money on a card that usually lies ignored at the bottom of the plastic pile until I need to buy a ticket on a very specific airline. Just like your ex isn’t actually concerned about your sleep habits when he texts, “U up?,” credit issuers don’t just toss out lower interest rates for fun. They are, in fact, checking to see if I am up.

But it would not be enough for me to simply write off this offer. I called upon a few credit card experts to remind me that this promotional APR that seemed temptingly better than the standard, agonizingly inflated APR, could be dangerous.

Even though this offer was “especially for” me, Michael Foguth of Foguth Financial Group confirmed that the offer I received wasn’t personal at all. It’s more likely that the institution has capital it wants to loan, he said. “It’s cheaper for them to go to existing clientele and have them spend more money than to bring in new clients,” he said. “The cost of acquisition is a postcard stamp or less.”

What about that lower interest rate? Is it worth using that card a bit more during the promo window?

Sure, Foguth said, if you’re looking to switch up your primary card for the summer. My card in question does offer rewards, so changing up the card I typically reach for could diversify my reward earnings. (I did activate that offer with just one click, in case you’re wondering. It was really that easy.) But Foguth went back to the simplest rule of credit card use: “Even if you have an introductory rate of 3%, you should still do your best to pay it off,” before the introductory period ends, he said.