The credit card industry is a competitive one; all you have to do to see that is open your mailbox. For many consumers, pre-approved credit card applications can be found every week in the mail, often accompanied by offers to let you transfer an existing balance from another credit card at a low interest rate. Sometimes these rates, known as “teaser” rates, can run as low as 0%, which can make applying for one of these cards rather tempting. Be careful, though. The fine print in the terms of agreement on those cards could hide some very expensive surprises.
Here are some things to watch out for in the fine print when you apply for a card with a low-interest introductory offer:
Default rate – How high can the interest rate go if you fail to make a payment on time? This is known as the “default rate.” If you pay late, your 0% or 3% interest rate could rise to 30%. Make sure you know.
Duration of the low rate – How long does this “teaser” rate apply? Six months? Until you pay off the transferred balance? Make sure you find out, as these rates often rise to the regular rate that applies to the card...
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