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A Bad Zero Percent Card Offer

I received a credit card offer this past weekend from Discover for “Zero Interest for for life = No Worries”. Wow! But then I read the fine print which started with a 3% transfer fee, not too bad if the minimum payments are 2% of the balance, it still seemed okay. Then I read more and started to worry. If I made a late payment (you know, sometimes the mail is late, or two envelopes stick together), the default rate jumps to 29.99%, ouch!
From there, it only gets better. The way to keep the zero percent rate on the transferred balance is to charge a minimum of $50 each month that will be subject to a 15.99% rate. Of course, payments are made to the zero rate balance first so the balance at 15.99% just continues to increase. In the very fine print further down, they offer “if more than 90% of your balance consists of special rate balance transfers, we may increase your minimum payment due to a maximum of 4% of the new balance. So, if I am approved and receive a credit line of $10,000, and immediately use it to pay down a higher rate card, not only do I risk impacting my FICO score by maxing out new credit, but my minimum payment will start at $400, along with the requirement that I charge $50/month at the higher rate. There’s also a nice warning that merchants don’t always post charges immediately, so that required $50 purchase may sit at the merchant and miss your billing cycle, in which case your zero interest rate evaporates for good.
Sorry, too many rules, too many ways to screw me over. I can beat the mail risk by making direct payments on line, but that last risk isn’t one worth taking, I’ll thing this offer goes right into the shredder.

Any other crazy deals like this in your mailbox? Drop me a comment.
Joe

  • JOE April 8, 2009, 11:41 am

    Sounds good, just read the fine print, and be sure to make those minimum payments! Good luck!

  • Dave April 8, 2009, 10:42 am

    I just took up Penfed on their 2.99% APR for life on balance transfers, with a 2.5% BT fee capped at $100. Nice!

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