This Mistake Could Cancel Out Your Credit Card's Intro APR Offer

After buying my first house, moving across the country, and facing some century-old-home woes, my current financial health is balanced on the back of three 0% intro APR credit card offers. Having the breathing room to pay off a few big expenses over time, without two-figure interest fees accruing, is what’s truly saved my metaphorical bacon this year.

As vital as these credit cards are right now, I have to be very, very careful to avoid the one mistake that could cause it all to come crashing down: a late payment.

Even 0% APR offers require minimum monthly payments

One misconception I see sometimes about 0% APR offers is that you can just run up a balance and forget about it for a few months. That’s totally wrong.

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At the least, you need to make your required minimum payment every month before the due date. If you don’t make that minimum payment by the due date, you’re late.

Each issuer calculates the minimum differently, but expect it to be about 1% of your balance. So if you have a $5,000 balance, expect your minimum payment to be around $50. (If you have a very low balance — usually $25 or less — your minimum due will be equal to your balance.)

One late payment can be enough to ruin your deal

Hidden in the fine print on some intro APR credit cards, you’ll find a short sentence warning you that a late payment can end your intro APR offer. Here’s one from a Chase credit card:

“Loss of Intro APR: We will end your introductory APR if any required Minimum Payment is 60 days late, and apply the Penalty APR.”

Other than the cards without this clause, this is probably the most generous version you’ll find. You see, Chase gives you a whole 60 days to fix the issue before it takes action. Other issuers aren’t nearly so kind.

Here’s what one Citi credit card says: “Loss of Introductory APR: We may end your introductory APR and apply the Penalty APR if you make a late payment.”

In this case, you could be looking at the end to your intro APR for being just days late.

Oh, and did you notice those bits about the “penalty APR” that each warning included? Yeah, that’s because when your intro APR offer gets cancelled, you may not simply revert back to the standard APR. Many issuers slap you with a higher penalty APR instead.

Penalty APRs: Kicking you while you’re down

In addition to charging you a late fee, some card issuers apply a penalty APR if you fall behind. This penalty APR becomes your new purchase APR.

What’s the big deal? Penalty APRs can get ridiculously high, with 29.99% being the standard penalty APR for big issuers. Going from 0% to 29.99% APR can be a seriously dangerous financial shock. Even just a hike from an APR in the 20% range up to 29.99% can cause your balance to grow with interest noticeably faster.

Worse, penalty APRs aren’t always temporary punishments. Some issuers offer a path to getting out of the penalty box, while others only warn you that the penalty APR could apply “indefinitely.”

How to avoid late payments

The only sure way to avoid this problem is to make sure you pay on time, every time.

In my case, I already check my credit card accounts at least weekly as part of my personal finance routine, so due dates never sneak up on me. (I strongly recommend everyone make managing their financial health part of their regular routine.)

If you want to automate the process — either for convenience or peace of mind (or both) — then set up autopay. This lets the bank automatically transfer your minimum payment (or however much you dictate) each month before your due date so you’re always at least on time.

Most issuers will also let you set up payment reminders via email, text, or phone notifications. You could also create your own calendar reminders, place sticky notes everywhere, train your dog to remind you…really, whatever works to make sure you stay on time and your intro offer stays intact.

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