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

Peter Terlato avatar
Peter Terlato
- 4 min read
What is a honeymoon credit card rate? Here's how they work

A "honeymoon rate" is a limited-time offer that can kick off your credit card journey with a financial advantage. Generally offered to new credit card customers, a honeymoon rate affords successful applicants a lower interest rate for a specified period.

During this honeymoon period, which typically lasts for several months, you'll enjoy the benefit of paying a reduced interest rate on your credit card balance. This can be quite handy if you need to make purchases that you might not be able to pay off in full right away.

Honeymoon rates are commonly offered to those seeking balance transfers, potentially providing a little extra breathing room and possibly making the early months of credit card use less financially stressful.

A credit card balance transfer is a type of debt consolidation that can help you pay down your mounting credit card debt faster. It involves transferring your debt from one or more credit cards onto a new card with a temporary low interest rate to minimise your charges while you pay off your outstanding debt.

The special, lower rate you’re offered during a honeymoon period will vary between different credit card providers. Some cards even offer interest-free honeymoon periods.

How long does a credit card honeymoon period last?

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.

What benefits do credit card honeymoon periods offer?

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.

Checklist for credit cards offering a honeymoon rate

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: 

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

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Product database updated 15 Jul, 2024

This article was reviewed by Personal Finance Editor Alex Ritchie before it was published as part of RateCity's Fact Check process.