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    Introductory interest rates explained

    Some credit cards offer an ‘introductory’ or ‘promotional’ interest rate.

    These often include 0% or lower than average interest rates which last for a fixed period, but there are usually conditions you need to be aware of.

    You may find credit cards with introductory interest rates on some or all of the following: 

    • Card purchases.
    • Balance transfers.
    • Money transfers.

    A simple example of introductory interest rates

    We’ve shown some figures, just for illustrative purposes:

    New card arrives

    It features 0% interest on new balance transfers for 18 months from account opening. Just bear in mind that a transfer handling fee may apply.

    Request a transfer

    To qualify for this introductory rate, you need to complete all transfers within the first 60 days. After that, the standard interest rate will apply.

    Make payments

    You could lose your introductory rate if you don’t make at least the minimum payment by the due date each month, or if you go over your credit limit.

    Before it expires

    The more you repay before your introductory rate expires, the less interest you’ll pay overall once the standard interest rate applies.

    Things to consider when choosing a card

    • The lowest and longest lasting introductory interest rates are usually offered on one primary transaction type, e.g. for balance transfers, so think about the main reason you need a credit card before you start looking.
    • You can use a credit card that’s designed for transfers to make card purchases and other types of transaction too. Just bear in mind that higher interest rates may apply. 
    • Will you be able to pay off your balance within any introductory offer period? If not, a low rate credit card could be more cost-effective over a longer term. 
    • Factor in any fees which will increase the overall cost of borrowing, e.g. transfer handling fees.

    Understand the costs

    A representative example is provided to show the typical costs if you borrowed £1,200 over a year, based on the card purchase interest rate only. It’s useful to know that this doesn’t factor introductory interest rates, so your actual interest costs could vary, depending how you use and manage your new credit card, particularly during the introductory period.

    Consider other options

    • Does this option suit my borrowing needs, or should I consider other alternatives?
    • Will I be able to make repayments, even if my circumstances change?
     

     Other borrowing options

    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.

    Frequently asked questions about introductory rates

    • 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.

    • 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.

      How to apply for a credit card

    • 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.

    • 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.

    Keeping track of interest rates

    Different rates of interest may apply to portions of your balance, varying based on transaction type, and whether a standard or introductory interest rate applies.

    To keep track, check: 

    • Your monthly statement – the transaction pages include a breakdown of the interest rates which apply to your balance, along with any expiry dates. 
    • Your account terms and conditions – these are issued by post after your application is approved, or if the terms of your account have changed, so make sure you’re looking at the latest version. 

    Have you been charged correctly?

    If there’s an account fee or charge on your Lloyds Bank credit card statement that you wouldn’t expect, simply contact us to query it on 0345 606 2172. Speak to an adviser 7am-11pm, 7 days a week.

    Manage your account carefully

    • If you miss a payment or go over your agreed credit limit, in addition to fees and charges, you could lose any introductory or promotional interest rates on your account. If that happens, your standard account interest rates and fees will apply instead. 
    • Your credit score could also be affected, which may make it harder to borrow in future, so it’s important to keep track and manage your account well. Remember to make at least the minimum payment each month, by the due date detailed on your latest statement.

    Key points about introductory rates

    • 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.

    Where next?

    Fees and rates

    Related guides

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