Beware of credit cards that offer low introductory rates but rise steeply later


Credit cards that offer low interest rates are about as common these days as autumn foliage.

But some of those sweetheart deals are merely gimmicks to attract naive consumers.

For example, some credit-card issuers are trying to woo customers with "teaser" rates -- low introductory rates that rise considerably after a short period. Teaser rates usually are extremely low -- often in the single digits, said Robert McKinley, publisher of CardTrak, a credit-card newsletter in Frederick.

But after a few months, the rates often rise to 18 percent or more.

"It makes sense for consumers to be a little wary of single-digit interest rates," Mr. McKinley said. "You have to proceed with caution and make sure you are not getting sucked into a gimmick."

Certainly, not every card with a low introductory rate is a gimmick.

Wachovia Bank (800-842-3262), for example, recently unveiled a Visa and Mastercard with a one-year introductory rate of 6 percent. Then the rate would be 3.9 percentage points above the prime lending rate -- now 6 percent at most banks.

When looking for a low-rate card, consumers also should consider other factors. For example, some cards charge a relatively low annual fee, and others offer longer grace periods before interest is charged.

If consumers plan to transfer their balances from one card to another, they should make sure that such a transfer would not be counted as a cash advance, which often carry higher interest rates.

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