BANKING AFFAIRS

Detailed explanation-1: -A teaser rate generally refers to an introductory rate charged on a credit product. Credits cards may charge borrowers an introductory rate of 0%. Adjustable rate mortgages (ARMs) are also known for charging a low initial rate that helps entice borrowers.

Detailed explanation-2: -Teaser rates are attractive starting rates that financial institutions or companies use to attract customers. Teaser rates are common on credit cards and loan products, but can also be offered on investment products, such as annuities. In this case, an initial high rate is offered only for a limited time.

Detailed explanation-3: -For example, if you opt for a home loan for a period of 30 years at an interest rate of 8%, the bank may offer you a teaser loan for which you would need to pay only 6% interest in the initial three years. In the fourth year, your interest rate will switch to 8%.

Detailed explanation-4: -An introductory rate (also known as a teaser rate) is an interest rate charged to a customer during the initial stages of a loan. The rate, which can be as low as 0%, is not permanent and after it expires a normal or higher than normal rate will apply.