Credit Cards with Introductory Offers

Credit Card Introductory Offers are used by each of the major credit card providers, in their quest to acquire new credit card customers. These introductory offers include discounts on interest rates (e.g. 0% purchase rates and 0% p.a. balance transfers), reduced annual fees and rewards points.

The best credit card introductory offers which feature discounted interest rates offer highly competitive rates which are applied to your account for a fixed term, post which the rate will revert back to the cards “usual” rates which will generally be either the purchase or cash advance rate.

Credit Card Introductory Offers where reward points are offered are generally tied to some spend thresholds which if met, within a specific timeframe, release the sign up rewards points to your account.

Reduced Annual credit card fees and Frequent Flyer membership fees are also offered as introductory offers, where the fees for these services are discounted either for the 1st year, or for all subsequent years, subject to the credit card being used each year.

Best Credit Card introductory offer

Credit Cards with introductory offers can deliver good value from reduced interest rates, discounted annual credit card fees and sign up bonus reward points, though these introductory offers are focused on delivering a benefit in the short term, which needs to be balanced carefully with your intended card usage in the medium to long term. In this guide we will consider the pros and cons of the various types of credit card introductory offer, with a focus on assessing how any introductory offer impacts the credit cards in the medium term once, the introductory offer period has ended.

 

No annual credit card fee Introductory Offer

The majority of credit cards attract an annual credit card fee which is payable on the anniversary date of owning the credit card. This card fee is charged regardless of whether the card is used, and can range from $50 to $500 p.a. depending on the benefits that are included with the credit card. A popular introductory offer that is frequently offered by credit card providers, is a discount on the annual credit card fee, with a 100% discount not uncommon, leading to a $0 credit card fee, usually for the 1st 12 months.

When assessing these discounted card fee introductory offers it is important to understand the period over which the discount applies. Two of the most common approaches to discounting the annual credit card fee are:

  1. A discount on the annual credit card for the first 12 months, after which the credit card fee reverts back to the standard card fee.
  2. A discount on the annual credit card fee for the life of the credit card, subject to meeting some annual minimum spending or card usage criteria.

 

No interest on Purchases introductory offer

An introductory offer of an interest free credit card is a relatively new incentive being used by the credit card providers to entice new credit card holders to apply for their cards. This introductory offer delivers a 0% interest rate on any purchases made with your new credit card, for a fixed period of time, which is generally between 3 and 12 months.

These 0% interest free introductory offers include a list of stringent terms and conditions, which if breached can lead to the introductory offer being withdrawn or cancelled by the credit card provider.

The two conditions which are most commonly breached are the failure to make the minimum monthly repayment on the credit card and spending beyond the approved monthly credit limit of the card, both these breaches generally lead to a withdrawal of the introductory offer which results on all purchases ion the card reverting back to the standard purchase rate of the card.

A further condition of the 0% interest Introductory Offer which can significantly determine the value derived from the introductory offer is the card providers definition of the types of purchases which are subject to the 0% interest rate and those which are not. This definition of purchases can differ by credit card provider but generally purchase types which do not benefit from the 0% introductory offer rate are cash advances, ATM withdrawals, some utility bills, ATO payments and foreign currency purchases.

At the end of the introductory period any balance outstanding on the credit card will attract interest charges at the cards revert interest rate, this rate tends to be either the cards purchase or cash advance rate, so when accessing these 0% introductory offers it is important to understand what the revert rate is, and how competitive it is.

 

Credit Cards with Rewards Points Introductory Offers

This is one of the most popular introductory offers, where the credit card providers award the new card holder with a number of rewards points as an incentive to choose their credit card, with introductory offer point levels ranging from 5,000 to 100,000 reward points.

Increasingly the award of these introductory offer points is linked to card usage with the points only being awarded to the cardholder once they have made a purchase or purchases of a certain value, over a stipulated time frame using their new reward credit card. This linking of the introductory offer to card usage by the credit card providers is designed to prompt early usage of the credit card in the hope of making the use of the credit card habitual. To derive value from any introductory offer of reward points you should ensure you are able to repay these early transaction amounts in full, to avoid incurring any interest charges on these purchases which would quickly negate the value gained fro the sign up bonus reward points. A typical example of an introductory offer linked to short term spend criteria would be the Virgin Velocity Escape Credit Card where the introductory offer conditions state that the 7,500 bonus Velocity Points will be awarded when you apply, are approved and spend $300 on your new credit card within the first 3 months.

Introductory Offer reward point credit cards are frequently offered with Qantas PointsVelocity Frequent Flyer PointsCiti RewardsAltitude Rewards and American Express Member Rewards. When comparing the introductory offer on offer be mindful that adding points to an existing reward account may deliver better value than opening a new reward program as having a number of reward programs means you will be spreading your reward points across multiple accounts, which will make it harder to attain sufficient points to redeem against the higher value rewards on offer.