What to Do When Your 0% Interest Rate Offer Expires

What is a 0% Promotional Offer?

A 0% APR introductory offer is a new credit card offer that allows consumers to make use of 0% interest charges for a period of typically 6-21 months. Essentially, promotional offers like this are meant to entice consumers into opening a new credit card with the hopes they cannot repay the borrowed amount within the guidelines of the introductory offer.

What Should Card Holders Be Aware of?

Cardholders need to be very ware about the terms of the promotional offer and when it expires. Although, these offers can differ slightly, most credit card companies have a clause within the offer stating that if the balance is not paid back in full by the end of the introductory period, the consumer may owe retroactive interest (based on the standard APR) on any purchases made throughout the entirety of the promotional period. If you don’t know when the promo period ends and still retain a balance at the end of it, you could be on line for interest charges made throughout the period, even if your balance was next to nothing at time of expiry (i.e. $100 balance).

How Long Do Promotional Rates Usually Last?

The length of the promotional period can vary significantly, it can range anywhere from 6-21 months, however most commonly these cards offer somewhere between 12-18 months of interest free charges. The main thing to know about the length of the promotional period in reference to a balance transfer card is that for the 0% offer to hold up—the balance must be paid in full by the end of the promo period.

What Should Consumers Know About the Agreement?

A Large majority of consumers do not typically look at credit card agreements. Cardholders should take an in-depth look at the terms of the promotional agreement, since offers can vary quite a bit, but the credit card company will typically put a notice on the statement or in your account portal. It is always best to fully understand the terms and account for any semantics within the agreement. Make sure you know the exact date otherwise it really could end up costing you a significant amount of interest in the long run. Always read the fine print! Cardholders should be able to easily find what their interest rate will be after the promotion period ends on their statement and on their credit card account portal.

What Does It Mean If You Still Have a Balancer of the Promotional Period Ends?

If a cardholder has a balance after the 0% rate expires this typically means that the regular APR is applied to all active purchases made during the promotional period—essentially nullifying the benefits of the 0% APR.

Promotional Rates

Promotional rates can apply to only transferred balances, new purchases, or both. Consumers should keep an eye out on which they are signing up for. Once the promotional rate is up it means that any new purchases may be subject to the new applicable standard APR. As with balance transfer cards this can be based on the remainder of the balance you have left over, but this really varies based on the credit issuer and the terms of the introductory offer. In theory, none of the above should impact your credit score. However, opening new lines of credit and retaining a high percentage of utilized credit will certainly negatively impact your score. So, if you open multiple credit cards within a short time frame (introductory offer or not) this will negatively impact your score since you have too much “new credit”.

What Consumers Should Know

It’s also important to look out for how credit issuers define the introductory period. Some credit card companies may base the promo period on “number of billing cycles” as opposed to “number of months”, so this can definitely impact the length of the introductory period if it’s not something you watch out for. Also, it’s very important for consumers to understand the difference between 0% offers that are based on deferred interest. With these offers, not having a $0 balance at the end of the period will allow the credit card company to charge retroactive interest on all charges.