Think Carefully Before Using Your Annual Ad Rate.
Zero interest credit card offerings are so common these days that I usually just delete or throw them away. Of course, one more is not far off if I want to, since I have solid credit. But they are always a little seductive: these are zero percent offers for six, 12 or 18 months on new purchases. Alternatively, these offers provide the opportunity to transfer the balance from a card with a higher interest rate to your own within a few months without interest.
Smaller print is a gimmick: at the end of the 0% interest rate period, your rate for whatever balance you have left will go up to 18-22%. If you’re not entirely religious about paying your balance every month, these offers can be tricky to navigate. Sometimes harder than they are worth.
But a few weeks ago, a new type of credit card offer hit my inbox. One that I have not encountered before. One for an interest rate that hasn’t entered my orbit for at least ten years.
Please note the kind and generous offer: I can get 8.99% per annum on new purchases made between June 1st and the start of the holiday shopping season. On December 1, my interest rate will return to normal, which is now 18.24%. There is no hidden deferred interest here that might interfere with some other loan offers, but I will have to pay a higher interest rate on any new purchases that have account balances at the end of the promotion period.
I knew what it was: a clever tactic to get me to spend more money on a card that is usually ignored at the bottom of the plastic stack until I need to buy a ticket for a very specific airline. In the same way that your ex doesn’t really care about your sleeping habits when he writes, “Are you up?” They actually check if I got up.
But it would not be enough for me to simply write off this sentence. I reached out to several credit card experts to remind me that an advertising annual interest rate that seemed temptingly better than the standard, painfully inflated annual interest rate can be dangerous.
Even though the offer was “specially for” me, Michael Fogut of Foguth Financial Group confirmed that the offer I received was not personal at all. According to him, it is more likely that the organization has capital that it wants to lend. “It’s cheaper for them to reach out to an existing clientele and get them to spend more money than it is to attract new ones,” he said. “The acquisition cost is postage stamp or less.”
What about a lower interest rate? Should I use this card a little more during the promo window?
Of course, Vogut said, if you want to change the main map for the summer. My card in question offers rewards, so replacing the card I usually use can diversify my rewards. (I activated this offer with one click if you’re interested. It was really that simple.) But Vogut went back to the simplest rule of using a credit card: “Even if you have an initial rate of 3%, you should still do your best. to pay off, ”he said before the end of the introductory period.
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