A few years ago, I got one of those 0% for life credit card offers from Discover. Meaning I could transfer balances that would have 0% interest as long as it took me to pay off my balance considering the following two conditions were met:
make my minimum monthly payment on time, never be late.
make 2 additional purchases each month. These purchases would accrue interest at the normal purchase rate, which is currently 13.99%. The monthly payment would be applied against the balance transfer first and then when it is paid off against the monthly purchases.
My new wife had some pretty large outstanding credit card debt when we married, about $20,000. I did a balance transfer to Discover for the $20,000. I have set up an automatic payment so that the minimum monthly payment is auto drafted from my bank account. And every month when I fill up with gas, I make two additional gas purchases for $0.02. My total purchases since putting this into effect about 2 1/2 years ago is about 75 cents, of which I’m paying 13.99% on, while the $20,000, I’m paying 0% on.
I’m surprised they let you bill for 2¢. Every merchant agreement I have worked with has made $1.00 a minimum limit to be able to bill for.
Of course Discover could cancel your card, or worse they could lower your credit limit below what you owe and you’d be in for trouble. They did that to me, I had a $200 balance, and my Discover Business went from $5,000 credit limit to $100 credit limit and I was told I had to pay any overage in my credit limit balance to avoid any over the limit fees.
With such a good deal why would you use your credit card to pay $0.02 for gas? You are just begging for your account to be flagged and readjusted. Be glad that somehow you have slipped through the cracks dude.
Why not find a home equity loan for a reasonable % amount and pay off the credit card. Then your intrest rate is tax deductable and you don’t have to worry about some Credit Card Gestapo screwing over your interest rate one day.
I’m sure some more intellegent accountancy types will come in here and tell you smarter ideas. But I think you are waving your butt at the big kid with a stick.
Sounds great! Sure beats my use of the card to get cashback for cash-over-purchase at the grocery store!
I remember when cards began offering cashback, some allowed it on travellers checks. For a while folks would regularly go to their banks and charge travellers checks and then deposit them right back into their account, running up cashback all the time.
Yep, you are not the only one who has thought of this. I was pulling in thousands of dollars of interest for awhile off of zero percent offers (a couple for life, the rest were largely 1 year deals). Unfortunately pretty much all of these 0% rates have dried up (Not to mention savings rates are terrible right now).
There is actually some pretty good news for you. One of the laws in the credit card reform act is that companies can not force individuals to make purchases to keep a certain APR. Soon, you should no longer have to make those two purchases a month to keep your 0% rate.
Why would he do that? 0% is a much better rate than anything you will get on a HELOC (even if it is tax deductible). It is possible that Discover can change the terms (Chase did this several months ago to their 0% apr life of balance offer), but he can always pay it off then (either with the cash that he hopefully just has parked in a bank account, or taking out a HELOC at that point). You ALWAYS have the option to decline a chance in terms and close the card.
The OP gets away with what he is pulling as for every person like the OP that is gaming the C.C. companies, their are 3 or 4 who are paying massive fees and high interest rates due to these type of offers.
I have a few similar deals going. There used to be all sorts of ultra-low interest teaser deals. And it isn’t hard to play by their rules sucessfully for years, profiting on the spread. A guy down the street had over $100K in teaser CC debt invested in Treasuries earning 3% net pretax.
OTOH …
One of mine dried up last month. Back in 2005 I bought a used $30K car at 2% on a Visa card and have been paying the bare minimum ever since while my cash is well invested. I win, they lose; all is right with the world.
Last month they sent a notice that they were unilaterally changing the rate to 8.5% effective next month. Not because I’d done anything wrong, just because they had the right to change the deal whenever & wherever they wanted, and all teaser rates were being discontinued.
So what did I do? Paid off the car.
The key thing in today’s world is that you cannot have more in teaser debt than you can pay off immediately. The banks are going to get out of that game by hook or crook. I’d be amazed that Discover’s lifetime zero% deal doesn’t have some get-out clause for them which they will eventually exercise. To the OPs detriment.
UPDATE: Just got a letter from Discover, saying that the terms of my card have been changed. I am no longer required to make the 2 monthly purchases to keep the 0% rate for life. This deal just got even better.
