Dealing With Credit Card Offers

Credit card offers frequently use teaser rates to acquire new customers. These are introductory rates that last a few months before the regular interest rate kicks in. Some of the attributes of teaser programs include:

Length of time the rates are offered. Teaser rates generally last only a few months, perhaps three to six months. Be sure to ask the card company what the regular interest rate will be when the introductory period expires.

New purchases. Teaser rates often only apply to new purchases made with the card. If you're attempting to improve your credit, however, the last thing you may need are further enticements to spend.

Transfer balances. Teaser rates that apply to transferred balances offer some temporary relief from higher interest rates. For example, if you transfer $5,000 in balances to a new card that charges 2.9% for six months from a card that charges 15%, you can save $300 in interest. Be sure to ask what the regular rate will be when the intro rate expires. It may be higher than the rate on your current card.

Rate escalations. After an introductory period expires, the rate on your card is bound to escalate. The question is whether it will be a higher rate than the rate on your current card. If so, you'll begin to lose that $300 you saved during the introductory period. Worse, the low intro rate on new purchases may have led you to actually increase the amount you owe.

Intangible costs of card surfing. Some card users actively take advantage of introductory offers, transferring their balances to a new card when the offer expires. This technique of "surfing" your balances may work for a while, but it's likely to catch up with you. The time and effort spent doing this may begin to take a toll. You may wind up mistiming the offer, paying a rate that is much higher than your current rate. You may also simply run out of introductory offers. A card company that you've left once before is unlikely to extend another introductory offer to you. Finally, surfing your balances doesn't address what may be the core problem: failure to repay your card debt.

The above information is educational and should not be interpreted as financial advice. For advice that is specific to your circumstances, you should consult a financial or tax adviser.