With so much competition in the marketplace, credit card companies use a variety of strategies to win new customers. This includes so-called “teaser offers” that provide the perks card users love. Sometimes these perks seem too good to be true and, as it turns out, they may be.
You’ve seen the advertisements – credit cards with zero percent APR, long payment grace periods, access to amenities like NFL tickets or the latest electronic gadgets. They’re all designed to attract new cardholders, and many of the incentives can be of real benefit to consumers. However, these “teaser” offers are usually short-lived, so it’s important to understand what your cardholder agreement will look like over the long-term. Ask yourself the following two questions before signing on with a new credit card company:
What is the future APR?
Most consumers know that they should pay their bill down to zero each month, but many people carry balances. If you think you’ll find it difficult to maintain a zero-balance over time, think twice before you jump on that zero percent APR offer. It’s likely to expire in 6-12 months, and then you might be subject to an APR as high as 25.99 percent. You’ll also want to determine whether a zero percent offer applies to balance transfers only, or to new purchases, too.
Is there an Annual Fee?
An annual fee isn’t all bad – it usually means your card offers some of the best perks available. Still, you’ll need to consider whether you’ll feel burdened by a hefty annual fee, regardless of any incentives you might also receive. If the annual charge outweighs the monthly benefits, you may want to look elsewhere. Many cards today come with fantastic benefits and no annual fee.
When it comes to credit card teaser offers, it pays – quite literally – to be an educated consumer. Ask questions and read the fine print before entering into any financial relationship that could impact your credit score, including with credit card companies.
Image via Flickr/Elysse Curry