Interest Rates: Introductory and Per Annum Compared

An introductory rate can be a saviour to those in debt, but may be a danger in disguise for people new to credit cards.

Before assuming that an interest rate will be a boon or a trap, it is important to consider the benefits and disadvantages that come with introductory interest rate offers and per annum interest rate offers.

Introductory Interest Rate Offers

There are some amazing introductory interest rate offers available for new credit card customers, but it is all about what will work for you.

For example, a competitive offer like the Citibank Clear Platinum Visa, which current has 0% p.a. interest rates on purchases and balance transfers for the first six months could be great for someone who has a debt that can be cleared in half a year or less.

If the debt will take even longer than that to pay off, and it is the main priority, Citibank’s Gold Card is definitely worth a look because it has 1.9% p.a. interest on balance transfers for 15 months and up to 55 days interest free in case spending still needs to be done during the debt-paying time.

The key thing to remember with interest cards is whether they will work in your favour or not. That way you can make the most out of them when you need to.

Standard Variable Interest Rates

Sometimes the adjustment after introductory periods can work against people, however, especially when some cards may offer 0% for a limited time, then jump to somewhere above 20% p.a.

For people who have never had a credit card, or struggle to get used to repayment schedules, it may be better to opt for something that won’t come to an end so quickly.

The ANZ Low Rate MasterCard, for example, has a purchase rate of 13.49% p.a., which is only subject to change under other circumstances, like a rate rise from the Reserve Bank of Australia.

Another option to consider is credit cards that offer competitive introductory interest rates, and then revert to a slightly higher interest rate. A card like NAB’s Low Rate credit card which has a 6-month offer 3.99% p.a. and 0.99% p.a. on purchases and balance transfers respectively, then goes to 13.49% p.a. interest for both.

Another highly praised credit card offering this kind of compromise between introductory offers and low rates is the Bankwest Lite MasterCard – it has 5.99% p.a. interest rates on purchases and balance transfers for 12 months and 10.75% p.a. after that.

Looking into introductory offers and the standard variable rate after those offers has finished means there are no nasty surprises in store. That is one of the main reasons why credit card comparisons are so important now, and in the future.