Is Discover getting desperate?

[vanillabean]

I have received a convenience check offer in the mail from Discover with two options: 1) 0% APR 1% fee for 10 months, 2) 3.99% APR 0% fee for 18 months. The one percent is less than inflation!

[Anonymous]

Wow, option 1 is great.  Charge 9% of your CL for 10 months, deposit cash in any decent interest bearing savings account.

[DaveInAZ]

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@vanillabean wrote:

I have received a convenience check offer in the mail from Discover with two options: 1) 0% APR 1% fee for 10 months, 2) 3.99% APR 0% fee for 18 months. The one percent is less than inflation!

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Apparently not too desperate, my monthly offer is currently 1) 0% APR of 12 months but 3% fee, 2) 4.99% APR for 18 months 0% fee.  Cap One is offering me a better deal, 0% APR 18 months, 2% fee, so I guess Cap One is desperater? (I like inventing new words)

[Schwartzinator]

I've got the same offer as Dave. Not that I plan on carrying a balance let alone transferring one, I none the less appreciate their open offers. 3% or 4.99% sure beats the varriable 11.74%. 

[happypill]

Well, I'd guess that they are pretty much like every other credit card issuer that hopes, by offering perks like 0% APR that some portion of the people will end up carrying a balance for a long time and end up paying them a lot of fees & interest over the long haul.

There are entire industry segments built upon the fact that some people will gladly pay many times what something is worth if they are allowed to pay little by little over time.  it's pretty much how all those 0% financing furniture stores and "we'll finance anyone" used car dealerships make the vast majority of their profits.

[newhis]

I guess they are doing things right, so they have money and they can offer it to some people for that low. My Discover offers are always 3% fee or more.

I think Cap1 offered a 2% for 15 months or so, that was before I accepted a temporary APR reduction (I wanted a permanent one).

DW's Barclay (was SallieMae), just received an offer for 0% for 14 months and 1% fee.

[Anonymous]

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@Anonymous wrote:

Wow, option 1 is great.  Charge 9% of your CL for 10 months, deposit cash in any decent interest bearing savings account.

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@Except that as I read the OP, this isn't a purchase option, it's a balance transfer with a 1% fee.  1% @ 10 months works out to an effective interest rate of 1.2% APR.  There are savings accounts you can find at 1.2% APY. But remember, that 1.2% APY you'd earn is taxable (and the 1% fee you paid for the B/T is not tax deductible).  After income taxes, 1.2% becomes only 0.81% (for me; YMMV, but probably in the ballpark).  In fact, you'd actually have to get a savings rate of about 1.8% APY to break even on this deal, and that's just not realistically going to happen this year, even in a rising interest rate market.

No sale.

Now, back in the day (before the Great Recession), when every other lender was offering a 0% 0-fee 18 month B/T and you could earn 6% on a 1-year CD, now *that* was gravy.

Chris.