topic Re: Discover Balance Transfer Confusion in Credit Cards

Discover Balance Transfer Confusion

Anonymous — Fri, 02 Oct 2015 22:29:34 GMT

I feel like a bit of an idiot, but it's better to ask than assume

I have a balance transfer with discover that I'd like to take advantage of (0%, 12 months, 3% fee)

I keep getting hung up on this:

"Your savings will be less if you make purchases.

With a balance transfer, you will be charged interest on purchases unless you choose to pay your entire balance in full, including any transferred balances, by the first payment due date."

So, I'm probably reading this wrong, but is this saying - transfer a balance and you get 0% for 12 months. However, if you use your discover card, you'll be charged interest on your entire balance unless you pay in full (including your transfer) by the due date. I don't think this is true, since it would make you not use the card and I'm sure that's the last thing they want.

I'm sure plenty of you have used Discover before for balance transfers. My assumption is this is referencing the account you're transferring FROM, warning you to pay in full to avoid interest. I assume after the transfer I'll have two balances in a sense - one with the 0 for 12 months, and one with my normal interest rate.

Could anyone clarify?

Thank you

Todd

Re: Discover Balance Transfer Confusion

Anonymous — Fri, 02 Oct 2015 22:32:29 GMT

transfer a balance and you get 0% for 12 months. However, if you use your discover card, you'll be charged interest on your entire balance unless you pay in full (including your transfer) by the due date. - I believe this is exactly what it means but Im not 100% certain so I'll let others respond. I think the only way to avoid this is if the card also has 0% on purchases at the same time.

Re: Discover Balance Transfer Confusion

Anonymous — Fri, 02 Oct 2015 22:33:32 GMT

Thanks! I'll see what others have to say but that strikes me as idiotic if they want some swipes! XD

Re: Discover Balance Transfer Confusion

baller4life — Fri, 02 Oct 2015 22:35:12 GMT

That's why I don't use cards that have a bt balance. They are immediately put away until I pay off bt.

Re: Discover Balance Transfer Confusion

Anonymous — Fri, 02 Oct 2015 22:37:33 GMT

So this is pretty standard practice for most cards?

Or is it a very YMMV situation?

Re: Discover Balance Transfer Confusion

baller4life — Fri, 02 Oct 2015 22:44:08 GMT

Pretty standard.

Re: Discover Balance Transfer Confusion

bk510 — Fri, 02 Oct 2015 22:48:15 GMT

@Anonymous wrote:
transfer a balance and you get 0% for 12 months. However, if you use your discover card, you'll be charged interest on your entire balance unless you pay in full (including your transfer) by the due date. - I believe this is exactly what it means but Im not 100% certain so I'll let others respond. I think the only way to avoid this is if the card also has 0% on purchases at the same time.

That's correct....I just did a BT to my Disco....4.99% for 18 months.

Re: Discover Balance Transfer Confusion

UncleB — Fri, 02 Oct 2015 22:50:53 GMT

I just did a BT using my Discover IT card, and got the same message. My account is fairly new, so I'm still in the 0% APR for purchases as well, so until that expires I don't have to worry about it. However after that time, I'll have the same 'caveat' on my account, as well.

I'm not an expert (that's my disclaimer) but I think it has something to do with the way they credit the payments when they are made. If you have a balance with portions broken down into different APRs (for example, a cash advance APR and a purchase APR) they are supposed to count the payments to the higher APR portion first (I think that's part of the CARD law), but balance transfer promotions seem not to apply to that, possibly since it's a promotion and not an actual account 'rate'.

Nonetheless, under 'normal' circumstances (i.e. no new account promotion) if you are in the habit of PIF your account each month and you do a BT, you'll need to use a different card for your daily purchases until the BT is paid in full, since your payments will be credited to the BT portion of your account before your new purchases (meaning you'll accrue interest on new purchases).

Some folks might say I'm wrong about the specifics of the CARD law (and I might be... I'm not a lawyer) but in practice, this is how it works in real-life, for me anyway.

Hope this helps some!

Re: Discover Balance Transfer Confusion

Anonymous — Fri, 02 Oct 2015 22:54:00 GMT

Look at the terms of your offer. You may have 0% on purchases, as well. It may not be for the 12 months, but you may have it. I have a Discover offer for 0% on balance transfers for 18 months and only 0% on purchases for 6 months.

Re: Discover Balance Transfer Confusion

Anonymous — Fri, 02 Oct 2015 23:01:57 GMT

I agree with Baller, this is why I don't use cards with a BT for new purchases. However, it IS a YMMV situation (I was recently informed here that Barclay's tells you exactly what you have to pay by when in order to avoid interest). I know that for Chase and Discover if you were to charge something while on a BT and didn't take pains to pay just the right thing, you'll be paying more interest than you'd like (of course you'd like $0). I went around with Chase on the way my payments were applied and the interest charged when I had a BT with a low (might have been 1.99%) rate on my Amazon Visa.

I think what I figured out was that in order to avoid interest (or minimize as much as possible) you'd need to pay your min pay as soon as your statement is cut, and then if you charge, pay for that charge ASAP. I never tried it, but I think that's what I worked out in my mind.

Re: Discover Balance Transfer Confusion

axlm — Fri, 02 Oct 2015 23:17:08 GMT

@Anonymous wrote:
I agree with Baller, this is why I don't use cards with a BT for new purchases. However, it IS a YMMV situation (I was recently informed here that Barclay's tells you exactly what you have to pay by when in order to avoid interest). I know that for Chase and Discover if you were to charge something while on a BT and didn't take pains to pay just the right thing, you'll be paying more interest than you'd like (of course you'd like $0). I went around with Chase on the way my payments were applied and the interest charged when I had a BT with a low (might have been 1.99%) rate on my Amazon Visa.

I think what I figured out was that in order to avoid interest (or minimize as much as possible) you'd need to pay your min pay as soon as your statement is cut, and then if you charge, pay for that charge ASAP. I never tried it, but I think that's what I worked out in my mind.

I think someone posted about the proper way to do this a while back, but I don't remember if you need to let the purchase charge post first to the account or not. Also, IIRC, you need to pay the charge plus the interest accrued during the interval between the purchase and when the payment actually post.

Hopefully that person is still around and can clarify.

Update: found it! http://ficoforums.myfico.com/t5/Credit-Cards/Using-a-CC-with-a-Balance-Transfer-without-added-interest-cost/m-p/4113243/highlight/true#M1158845

Re: Discover Balance Transfer Confusion

bk510 — Fri, 02 Oct 2015 23:24:17 GMT

@Anonymous wrote:
Look at the terms of your offer. You may have 0% on purchases, as well. It may not be for the 12 months, but you may have it. I have a Discover offer for 0% on balance transfers for 18 months and only 0% on purchases for 6 months.

Right...like on mine, I have 0% for 12 months with 3% fee and 4.99% for 18 months with no fee....I took the latter for 2000.

Re: Discover Balance Transfer Confusion

bk510 — Fri, 02 Oct 2015 23:27:39 GMT

@Anonymous wrote:
I agree with Baller, this is why I don't use cards with a BT for new purchases. However, it IS a YMMV situation (I was recently informed here that Barclay's tells you exactly what you have to pay by when in order to avoid interest). I know that for Chase and Discover if you were to charge something while on a BT and didn't take pains to pay just the right thing, you'll be paying more interest than you'd like (of course you'd like $0). I went around with Chase on the way my payments were applied and the interest charged when I had a BT with a low (might have been 1.99%) rate on my Amazon Visa.

I think what I figured out was that in order to avoid interest (or minimize as much as possible) you'd need to pay your min pay as soon as your statement is cut, and then if you charge, pay for that charge ASAP. I never tried it, but I think that's what I worked out in my mind.

No, once you charge, it's game over....assuming OP doen't have 0% on purchase.

You gotta pay the whole thing off, in order to avoid interest. Some1 chime in if I got this wrong.

Re: Discover Balance Transfer Confusion

bk510 — Fri, 02 Oct 2015 23:30:54 GMT

@bk510 wrote:
@Anonymous wrote:
Look at the terms of your offer. You may have 0% on purchases, as well. It may not be for the 12 months, but you may have it. I have a Discover offer for 0% on balance transfers for 18 months and only 0% on purchases for 6 months.
Right...like on mine, I have 0% for 12 months with 3% fee and 4.99% for 18 months with no fee....I took the latter for 2000.

The only card with 0% on BT & purchase in my lineup is QS Visa 3K......til april billing. kind a sucks but you can win'em all.

Re: Discover Balance Transfer Confusion

Anonymous — Fri, 02 Oct 2015 23:38:51 GMT

"Your savings will be less if you make purchases.

With a balance transfer, you will be charged interest on purchases unless you choose to pay your entire balance in full, including any transferred balances, by the first payment due date."

-----

You'll be charged interest on purchases, but if you pay for those purchases almost immediately it'll be interest for a very short time. That's why I said little, but maybe not $0 interest. Also, for some reason I got it in my mind you will have had to already have paid your min pay before making any purchases to make it work out. That may not be the case. And of course, I could be entirely wrong.

But I had my Discover SD'd for 2 years until I paid off the last 0% I'd taken advantage of. I didn't even look at the categories until it had a $0 balance.

Re: Discover Balance Transfer Confusion

Anonymous — Fri, 02 Oct 2015 23:42:41 GMT

I think my reason for thinking I'd make the min pay just after statement cut was so that I was sure that I'd paid enough that enough was applied to the 0% amount first. There are very specific rules about how they have to apply payments and I think the first $ go to the min payment, THEN to the highest interest. Then to lower interests. So if your min pay was $50 and you also charged $100, and then paid $100 the first $50 would pay the min pay but then only $50 of your purchase would be covered so that $50 would start being charged interest. If it were the same situation and you paid $200, I think the first $50 pays the min, the next $100 pays the new charge, then the remaining $50 goes back to the BT rate balance.

Re: Discover Balance Transfer Confusion

axlm — Fri, 02 Oct 2015 23:43:10 GMT

@bk510 wrote:
@Anonymous wrote:
I agree with Baller, this is why I don't use cards with a BT for new purchases. However, it IS a YMMV situation (I was recently informed here that Barclay's tells you exactly what you have to pay by when in order to avoid interest). I know that for Chase and Discover if you were to charge something while on a BT and didn't take pains to pay just the right thing, you'll be paying more interest than you'd like (of course you'd like $0). I went around with Chase on the way my payments were applied and the interest charged when I had a BT with a low (might have been 1.99%) rate on my Amazon Visa.

I think what I figured out was that in order to avoid interest (or minimize as much as possible) you'd need to pay your min pay as soon as your statement is cut, and then if you charge, pay for that charge ASAP. I never tried it, but I think that's what I worked out in my mind.
No, once you charge, it's game over....assuming OP doen't have 0% on purchase.

You gotta pay the whole thing off, in order to avoid interest. Some1 chime in if I got this wrong.

See the update to my previous. I remember actually trying this on my wife's Discover because my quarterly cap was already met. I got hit for 50 cents, because that's their minimum interest charge, anyway. Eventually, I ended up so confused that we just paid off the whole balance the next month, in order to maximize Amazon without worries

Re: Discover Balance Transfer Confusion

Anonymous — Fri, 02 Oct 2015 23:46:37 GMT

@axlm wrote:
@bk510 wrote:
@Anonymous wrote:
I agree with Baller, this is why I don't use cards with a BT for new purchases. However, it IS a YMMV situation (I was recently informed here that Barclay's tells you exactly what you have to pay by when in order to avoid interest). I know that for Chase and Discover if you were to charge something while on a BT and didn't take pains to pay just the right thing, you'll be paying more interest than you'd like (of course you'd like $0). I went around with Chase on the way my payments were applied and the interest charged when I had a BT with a low (might have been 1.99%) rate on my Amazon Visa.

I think what I figured out was that in order to avoid interest (or minimize as much as possible) you'd need to pay your min pay as soon as your statement is cut, and then if you charge, pay for that charge ASAP. I never tried it, but I think that's what I worked out in my mind.
No, once you charge, it's game over....assuming OP doen't have 0% on purchase.

You gotta pay the whole thing off, in order to avoid interest. Some1 chime in if I got this wrong.
See the update to my previous. I remember actually trying this on my wife's Discover because my quarterly cap was already met. I got hit for 50 cents, because that's their minimum interest charge, anyway. Eventually, I ended up so confused that we just paid off the whole balance the next month, in order to maximize Amazon without worries

Heh. We just applied for another Discover for DH so he's got the 0% on purchases AND BT now and then I ended up paying mine off too.

Re: Discover Balance Transfer Confusion

Anonymous — Sat, 03 Oct 2015 01:40:08 GMT

you can use your card if you do a balance transfer. your minimum payments though, only the amount over it will be applied to the higher interest balance from new purchases. luckily back in april they added 0 for 12 on new purchases!

Re: Discover Balance Transfer Confusion

Anonymous — Sat, 03 Oct 2015 03:11:45 GMT

I had always understood this that if you take 5k BT and then make $100 in purchases. Then your statement comes out and you make a $500 payment. The new BT balance is going to be $4500 and that balance is still under 0% (Or whatever the BT % is) BUT the $100 in purchases is going to accrue interest at your regular purchase interest rate. You have to make $5000 in payments to clear the BT to $0 before payments start applying to any new purchases which are incurring interest at your normal purchase rate.

The end result is the same if you don't have 0% purchases and you make a BT don't use the card until the BT is paid off. I'm fairly certain that's how this works though.