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Introductory interest rates explained
Some credit cards offer an ‘introductory’ or ‘promotional’ interest rate.
A quick summary
- These often include 0% or lower than average interest rates which last for a fixed period. Look for a card with introductory interest rates which best suit your credit needs, i.e. for transfers, purchases or a combination of both.
- Bear in mind, interest rates advertised may vary when you apply, based on an assessment of your personal circumstances.
- To qualify for introductory interest rates, make sure you meet any conditions, e.g. completing transfers within 60 days of account opening.
- Make sure you keep up with account payments and stay within your credit limit, or you could lose your introductory interest rates.
- The more you repay before your introductory rate expires, the less interest you’ll pay overall once the standard interest rate applies.
A simple example of introductory interest rates
We’ve shown some figures, just for illustrative purposes.
Things to think about when choosing a card
Consider other options
- Does this credit card suit my borrowing needs, or should I consider a different one?
- Will I be able to make repayments, even if my circumstances change?
- If the card has an introductory rate, do I know when it will finish, and what my interest rate will be afterwards?
- Do I understand how my credit card balance will be paid off?
If you’ve already got a Lloyds Bank credit card and your needs have changed, you could apply for a second card (excludes Student Credit Card customers), or swap your existing card instead.
Keeping track of interest rates
Different rates of interest could apply to different parts of your balance. These rates vary based on the balance type, and whether the standard rate or a promotional rate applies.
To keep track, check:
- Your monthly statement includes a breakdown of the interest rates that apply to your balance, along with any expiry dates. You can also check your recent transactions using Internet Banking or the Mobile Banking app.
- Your account terms and conditions include details of the rates we agreed when your application was approved. We’ll issue new versions of these documents if your account terms and conditions change. So, make sure you check the latest version.
Manage your account carefully
You need to make at least the minimum payment each month, by the due date shown on your latest statement. If you miss a payment or go over your agreed credit limit, you could:
- Pay extra fees and charges. Such as late fees and higher interest charges.
- Lose any introductory or promotional interest rates. If that happens, your standard account interest rates and fees will apply.
- Damage your credit score. Having a lower credit score doesn’t just impact your eligibility for borrowing and lending. They’re also used as part of the approval process for mobile phone contracts, TV subscriptions, and other household bills.
Let’s look at the details
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When you’re selecting a credit card, you might notice that the duration of some introductory interest rates is advertised as being available for ‘up to’ a certain number of months. That basically means you could be offered the advertised rate, but you could also be offered a shorter duration instead, based on an assessment of your personal circumstances.
Similarly, where a low interest rate is offered as standard with no fixed expiry date, the interest rate itself may vary.
When you apply for a credit card, lenders make decisions about the interest rate and credit limit to offer, based on a number of factors. These include:
- Your credit record.
Credit reference agencies securely hold information about you and your financial past, issuing you a credit score. Lenders can access this information to support their decisions around offering credit. - Affordability.
We’ll assess what we think you can reasonably and sustainably afford to repay, based on things like your income and the total amount of credit that’s already available to you. - Current and past accounts.
Lenders usually hold a record of accounts you’ve held with them before, including information about how well they were managed. It follows that, the better your financial position and credit score are, the more likely it is that you’ll be offered a lower introductory or promotional interest rate. - Check your eligibility before you apply.
Many lenders now provide an eligibility checker to help you to find and compare cards you’re likely to be accepted for, without impacting your credit score. The Lloyds Bank version is called One Check.
- Your credit record.
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Although you may be offered an introductory interest rate lasting for months into the future, it may only be valid on transactions made within a shorter window at the start.
Balance and money transfers
You’ll have a number of days from the date your account is opened to make qualifying transactions – usually around 60 days. After that, the standard interest rates for your account will apply to further transfers. At Lloyds Bank you can request a balance transfer as part of your application, helping you take advantage of your new credit card benefits as soon as your account is opened. For money transfers you’ll need to wait until your account is set up and your card has been delivered.
Card purchases
You may have a number of days from the date your account is opened to make qualifying transactions – usually around 60 days – after which the standard interest will apply to further card purchases. However, on some cards, you may be able to make qualifying purchases for the duration of the introductory offer. Naturally, you won’t be able to make card purchases until your new credit card and, for store purchase, your card PIN are delivered.
Low standard interest rates
Some credit cards are offered with lower than average standard interest rates, rather than 0% introductory interest rates which expire after a fixed period. Although you’ll be paying interest from the start, there usually aren’t limits on when you transact, and the interest rates and costs may be easier to keep track of. This may appeal if, for example, you use your card for everyday purchases and pay off most, if not all, of your statement balance each month.
These conditions may vary between credit cards and transaction types, so when you’re comparing credit card benefits, make sure you check these details carefully.
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When an introductory interest rate expires, the standard interest rate at that time will apply to any remaining balance, so the more you repay before the expiry date, the less interest you’ll pay overall.
Making the minimum payment each month usually won’t be enough to clear your balance before the expiry date, especially if you use your card to make other transactions too, so it’s always a good idea to pay more whenever you can.
If you’ve continued to use your card, a number of different interest rates may apply to portions of your outstanding balance.
To help you to keep your interest costs to a minimum, payments you make will be allocated to balances with the highest interest rates first, and to those which appear on your monthly statement, before those which will feature on future statements. That’s still the case, even if an introductory interest rate is due to end.
It’s important to understand the way payments are allocated so you can figure out how much of your outstanding balance will switch to a standard interest rate when an introductory offer expires.
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The transactions pages of your PDF or paper statement has a breakdown of your balance and the interest rates that apply. If any of your balance has a promotional or introductory interest rate the expiry dates will be shown here.
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If you continue to manage your credit card account well, i.e. keeping up with payments and staying within your credit limit, you may be offered promotional interest rates in the future.
We usually contact you by email or post when promotional rates are available, but you may also see new rates advertised when you log on to Internet Banking or the Mobile Banking app.
As you’d expect, terms and conditions apply to these offers, so make sure you read the details provided carefully.
You can manage your contact preferences online at any time, or get in touch to switch between options. If you’ve opted out of marketing communications, we may still contact you with updates about your account, including when new rates are available, just so you’re not disadvantaged.
If you need communications in another format, e.g. large print, Braille or audio CD, please contact us.
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