by "66671 - 200 [METRIC] my dash" (66671)
Published 08/10/2017 at 15:01
by "66671 - 200 [METRIC] my dash" (66671)
Published 08/10/2017 at 15:01
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“Teaser Rate Law and Legal Definition: A Teaser Rate is an interest rate, which is low. It is generally an adjustable introductory interest rate advertised for a loan, credit card, or deposit account in order to attract potential customers to obtain the service. The teaser rates are normally too good to be true for the long term, and are far below the common realistic rate for the service. In a competitive market, many companies will compete with each other for the lower teaser rate. Typically, the teaser rate is 0%. The teaser rate is only temporary. After its expiration, the rate increases to a normal or much higher than normal rate.“
- https://definitions.uslegal.com/t/teaser-rate/
Anyone know anything or have experience with these (if you are willing to share)?
They’ve been legal? Still legal? Is there a reason why they shouldn’t be illegal?
"TorqueToYield" (torquetoyield)
08/10/2017 at 15:11, STARS: 1
Sure, credit cards do this all the time. Sign up for a new card, get 0% interest for a year or so, then the rate is at a normal rate like 15% or whatever. It’s a good option if you have a big purchase coming up and you want a new card anyway. It can also be a good option to consolidate debt if you can get 0% on credit transfers (although you’ll almost always still pay a one time fee).
I did this when I was buying a house and moving, knew the movers were going to be like $5000, plus was buying furniture. I had the income to pay it off over the course of the year and a new 0% card was the cheapest way to finance it.
"Ash78, voting early and often" (ash78)
08/10/2017 at 15:13, STARS: 1
They shouldn’t be illegal because they can be extremely beneficial to people who plan ahead. We’ve financed a lot of home stuff on 0% for 12 or 18 months, knowing full well that the interest was accruing behind the scenes at 24%, and that any default (or going past the promo period) would mean paying back the entire amount. That’s a lot sketchier to me than just a teaser rate — and modern disclosures like Truth In Lending basically require the lender to show the entire life of the loan.
15 or 20 years ago, everything was buried in the fine print and you were on your own. Conversely, I think it made people more financially savvy, so I’m not sure if it’s a net improvement...
"Nothing" (nothingatalluseful)
08/10/2017 at 15:21, STARS: 0
Unsecured debt (credit card). Quite common to get promo rates. Auto loans are fixed rate. I haven’t personally seen or heard of an promotional rate auto loan. Usually the issue there is credit score qualification for the best rates.
Mortgages do have ARMS. I’m sure some people (short term ownership, moving in 3, 5 years) can take advantage of those. I plan on staying in my house a long time. With rates so low when we bought, an ARM wouldn’t have made any sense at all.
Deposit account, I usually see gifts there rather than %. Like, we’ll put $150 in your account after 6 months, or $200 with 1st direct deposit, etc. A lot of times there can be fees hidden in there rather than an interest rate issue.
"benjrblant" (benjblant)
08/10/2017 at 15:40, STARS: 1
This could be incredibly beneficial if you’re looking to flip a house in a very short period of time. The potential of paying zero interest while increasing the property value is really lucrative.
"Future next gen S2000 owner" (future-next-gen-s2000-owner)
08/10/2017 at 15:47, STARS: 0
Teaser rates can be beneficial when used under the correct circumstances. For example, if you have high CC debt and want to get ahead on it by switching cards to one with a low introductory rate. But most people just bank on the lower payment from the introductory rate and get surprised when it jumps up.
ARM’s are weird. They are generally considered the evil in the US while other countries they are the norm. I think other countries may have greater control on the rates the ARM can adjust to but that is pure speculation.
"Future next gen S2000 owner" (future-next-gen-s2000-owner)
08/10/2017 at 15:47, STARS: 0
Teaser rates can be beneficial when used under the correct circumstances. For example, if you have high CC debt and want to get ahead on it by switching cards to one with a low introductory rate. But most people just bank on the lower payment from the introductory rate and get surprised when it jumps up.
ARM’s are weird. They are generally considered the evil in the US while other countries they are the norm. I think other countries may have greater control on the rates the ARM can adjust to but that is pure speculation.
"FoilyDoily" (foilydoily)
08/10/2017 at 16:22, STARS: 1
We used this to buy new appliances when we moved into our house. Ended up with 0% interest for five years or something (we replaced everything at once) and paid it off before we were hit with the couple thousand of interest that had accrued in the background. It’s a pretty useful way for people to avoid an upfront cash outlay, so long as you’re diligent about making payments.
"66671 - 200 [METRIC] my dash" (66671)
08/10/2017 at 16:48, STARS: 0
Ok yeah this makes sense, I should’ve mentioned I was more talking about ARMs but still good to know.
"66671 - 200 [METRIC] my dash" (66671)
08/10/2017 at 16:50, STARS: 0
And so you pay off the $5000 with o% interest before the teaser expires?
"TorqueToYield" (torquetoyield)
08/10/2017 at 18:54, STARS: 0
Yes, exactly, and I had a year to do so at the 0% interest rate.
I don’t see a reason that should be illegal. Its pretty well and simply explained in every statement I got with the date the intro rate was expiring. And the CC company gets a new customer and I get 0% APR for a year.