What is a honeymoon credit card rate? Here's how they work

It's crucial to understand that the cliché is true - the honeymoon doesn't last forever. The introductory period can vary between banks and credit card providers. Some banks may offer three or six month honeymoon rates, while others could give you up to 12 months. You’ll want to check with the financial institution that’s offering the deal as to how long the honeymoon will last.

There may also be minimum spend requirements and other conditions you might need to meet in order to qualify for or maintain the honeymoon rate for the full period offered. Be sure to check the full terms before applying for any credit card.

Once this initial period ends, the interest rate on your credit card will revert to the standard rate. This rate is likely to be much higher than the honeymoon rate, and it's the rate you'll be charged on any remaining balance you carry on the card. So, it's important to have a plan in place for how you'll manage your credit card debt once the honeymoon period is over.

Remember, credit cards can be really handy tools, but they need to be used sensibly. Taking advantage of a honeymoon rate can be a smart move, especially if you have larger purchases to make or unexpected expenses to cover. Paying off debt when you are lumped with high interest rates can be hard work, so it might be helpful to use a honeymoon period to pay down as much of your existing debt as you can at a lower rate.

Repaying your debts can also make applying for credit in the future that little bit easier, as the fewer outstanding finances you owe, the lower your debt-to-Income (DTI) ratio may be.

Utilising the honeymoon period on a credit card balance transfer could potentially affect your credit score, depending on your financial situation. For instance, the money you save on paying less interest with a balance transfer might help you to reduce your outstanding debt faster, which, in turn, may improve your credit score.

There are plenty of attractive low rate, or no rate, introductory offers to choose from so make sure you take into consideration the key differentiating points: 

• What is the specified time frame for the honeymoon period?
• What purchases does the reduced introductory rate apply to?
• Are there any special terms and conditions to be aware of?
• What is the standard interest rate that will apply after your honeymoon period ends?
• Do any extra fees or charges apply?
• What are the penalties for late payments?
• What are the other features, advantages and disadvantages of the credit card?

Don’t forget to shop around, compare and research all the credit cards on offer to find the one that suits your needs.