Credit Card Introductory Offers

It’s not difficult to get confused by the massive number of potential introductory offers that are thrown about by credit card companies. How do you know which one is for you?

Here’s an explanation of six of the most common introductory offers, and how they work:

Low Balance Transfer Rates
It’s fairly common now to find introductory offers that include balance transfer rates much lower than the standard – often zero percent – for a period of six months or so. While this may sound like a great deal, it’s important to remember that this period will not last forever, and you may find that the standard rate is higher than it is for the card you’re currently holding; in short, it’s possible to lose money by making the switch if you get caught unawares. This can work out to a considerable saving if you plan on clearing your card debt during the introductory period, but may cost you more in the long run.

Low Interest Rates
As is the case with balance transfer rates, many institutions offer a period of lowered interest rates on new purchases in order to bring new customers in. This is usually for six months (although it’s possible to find cards that offer a longer introductory period), and can be as low as zero percent. Once again, however, it’s important to note that this is only a temporary offer, and the standard APR of the card after this period may be relatively high.

Cashback
If the credit card in question offers a cashback service, you’ll be reimbursed a small amount (usually 0.5-1%) on every transaction you make on it. While this might not sound like much, it can soon add up – and if you pay off your account fully every month anyway, it amounts to a small discount on everything you buy, as you wouldn’t be liable for any interest rates (due to the fact that there’s no remaining balance).

Positive Repayment Order
This doesn’t tend to be a common selling point, but is quickly becoming a popular choice for consumers. While many credit cards arrange your repayments so that they pay for the most recent purchases first, positive repayment ordered cards redirect the bulk of your payments to clearing the debt on your most expensive purchases. In theory, this helps to spread the wealth around, and thus clear your debt faster.

Purchase Protection
Some lenders offer insurance on items bought on the card for up to 90 days after purchase, which can be very useful should something go wrong with an expensive buy you don’t have a warranty for.

Fraud Protection
A lot of cards offer you protection against purchases made on your card, should they prove to be the result of identity theft. However, beware of cards that say you only have to pay the first £50 of any fraudulent usage in your name; they’re only giving you what you already have under the Consumer Credit Act anyway.

Remember: as useful as credit cards can be, they can also end up becoming a fast-track to financial difficulty if used irresponsibly or excessively. However, if you spend wisely (and make sure you both know and stick to your budget), you should be fine.