Bank of America has been hammering me in snail-mail lately with their "Zeros" BankAmericard offer, where they offer 0% intro APR for 18 monts, $0 annual fee, etc; Each time I get an offer, I think, "Wow...every month they send this. Their desperation is showing. What gimmick are they running? At least they are not bad as Chase, who has been sending me their Atrociously Deceptive Balance Transfer Checks, for years on end."
Then, today, I decided to read the fine print of the BankAmerica card offer, and discovered that BoA is not as honest as I thought they were. They are not as bad as Chase, but they are still very sneaky. If you read the fine print, it says in one section:
If you revolve your blanace to take advantage of a promotional or introductory offer, all transactions and balances, including purchases, will be charged interest.
But if you read their standard DISCLOSURE SUMMARY, it says in the How to Avoid Paying Interest on Purchases section:
Your due date is at least 25 days after the close of each billing cycle. We will not charge you any interest on purchases if you pay your entire balance by the due date each month.
For those of us who pay our full statement balance every month, to avoid paying interest, these two stipulations appear to be mutually contradictory, until we examine, more closely, the last stipulation. The key is the phrase entire balance. This is not the same as the statement balance. Paying the statement balance is normally perfectly fine to avoid paying interest, and that is what all of us are doing when we put our accounts on auto-pay PIF.
And here we see the gimmick that BofA is running. It is the same Jedi-mind-trick that Chase is running, just not quite as bad.
These banks know that many of us are on auto-pay, letting us PIF each month. We have been conditioned that if we set-up auto-pay to pay the full statement balance every month, then we will not pay interest. But PIF on statement balance is NOT the same as PIF on entire balance.
What BofA did, which is quite sneaky, is tell the truth so that they cannot get sued. What they are hoping you will do is get the card, immediately use the balance transfer feature, leave it there, even a few bucks for 18 months, then use the card for purchases, etc, setting up auto-pay, then, at the end of 18 months, continue using their card as you normally would, letting your auto-pay PIF against the statment balance every month.
IF YOU DO THAT, YOU COULD GET SLAMMED ON INTEREST!!!!! LOL. People with my spending habits could pay several $100 per year interest with this gimmick, even while think we are interest-free because we have PIF-auto-pay set-up.
You will be caught in an interest vortex, where you might never get out of it, until you go eyeball your total balance, and do a force-to-zero against that total balance. Your auto-pay will, in general, not clear the total balance to zero, if you use the card every month to pay, say, an electric bill plus a few other items that you spread throughout the month. What's happening is that BoA will see that you paid all, except, say $45 of you bill (because the $45 was for dinner with wife after you PIF'ed on auto-pay). Then, you run-up, up to another, say, $1000 over a month. BoA's computers will come around on your auto-pay date, take, say, $917 of that as your statement ballance, and let the $83 dangle. That $83 is a number that is not $0. So you will pay interest immediately on any subsequent transactions that you make.
If you are mathematically-inclined, you can see that, if you have average monthly balance of $1000, then, at 17% APR, you will pay $170 in interest over year, even though you think you are on auto-pay PIF. This will go on indefinitely, until you force-stop it, manually.
I realize that some people might not understand this post and what the gimmick is. If you are such a person, my advice to you is simple: Stay away. You can get yourself into a lot of trouble by not understanding what these banks are up to.
