June 2014 - Discover Card "Welcome Back" 0% APR Promo Rate

[MrsDolce]

Hi Everyone,

If any of you have received a Promo Offer mailed to you by Discover, for a 0% APR for 1 year and the letter says "Welcome Back" you will want to read this.

• This offer is for those whose Discover account is in good standing - it's an add on to your current card
• You call the number listed and request to "enroll in the program". 
• What they don't tell you, is that even if this is a 0% APR offer, if you currently have a balance on your existing Discover Card, your monthly payments will be going first towards the lowest APR on your account, leaving the higher APR balance to continue to accumulate. They do this, to keep you from being able to pay down your card. 
• At end of program, you may end up with a higher APR rate, than what your current standard APR rate is. Upon approval they will quote you an APR, and you should check it to see if it is higher than your current Discover APR.

I recommend not applying for this program.  Let's supposed you have good intentions of paying off your APR.  These programs are designed to do one thing - get you further into debt with your card by making it appear they are doing you a favor.

If you have a $4k balance now, and you enroll, and all future purchases for the promo period are at 0%, let's say you rack up $2k in purchase.  A year goes by and you barely get your current $4K balance paid to a $0, now your additional $2k balance comes due with a higher APR, and maybe even higher than the one you have right now.  I noticed the after promo APR is higher than my standard Discover APR as of right now.

Avoid Discover - as soon as you make a move on paying down your balance, you will get offers like these. This is why we got it. We started making a move to get out from under these people.

I recommend Capital One or Barclay. They have been extremely generous with us, no tricks and no surprises.  Just got a letter in the mail today that they raised my limit another $800.  This is the 2nd increase since December.

[longtime_lurker]

Everybody has their own preferred lender(s), and I believe here on the forum we do a good job of respecting that and having thoughtful, intelligent conversations on all things credit related. That being said, I do believe that that is a good offer you just received from Discover. They are offering you a 0% interest rate for 12 months, and those purchases you do make, your payments are not applied to the 0% interest balance but the higher interest rate instead. As for the "may end up with a higher APR rate", ANY lender at ANY time reserves the right to cancel, CLD, or otherwise AA your account (it's in their T&C's).

Just my .02, but if I received that offer, I would take it.

[gh17]

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@MrsDolce wrote:

• What they don't tell you, is that even if this is a 0% APR offer, if you currently have a balance on your existing Discover Card, your monthly payments will be going first towards the higest APR on your account. They do this, to keep you from being able to pay down your card. 

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I'm pretty sure they have to do this by law.  They'd be scamming you if they didn't.  You WANT to be paying the highest interest first.  It will help you pay down faster.

Let's say you owe $1000.  $500 of it is at 0% and $500 of it is at 20%.  For simplicity, you can only afford to pay $500 this year (let's ignore late fees, etc).  If the $500 payment goes towards the 0% interest part, a year from now the other $500 (at the higher interest rate) has accumulated to $500*1.2=$600.  If, on the other hand, the $500 goes towards part with the APR, then a year from now the interest-accumulating $500 is gone, and you owe only $500.

[longtime_lurker]

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@gh17 wrote:

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@MrsDolce wrote:

• What they don't tell you, is that even if this is a 0% APR offer, if you currently have a balance on your existing Discover Card, your monthly payments will be going first towards the higest APR on your account. They do this, to keep you from being able to pay down your card. 

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I'm pretty sure they have to do this by law.  They'd be scamming you if they didn't.  You WANT to be paying the highest interest first.  It will help you pay down faster.

Let's say you owe $1000.  $500 of it is at 0% and $500 of it is at 20%.  For simplicity, you can only afford to pay $500 this year (let's ignore late fees, etc).  If the $500 payment goes towards the 0% interest part, a year from now the other $500 (at the higher interest rate) has accumulated to $500*1.2=$600.  If, on the other hand, the $500 goes towards part with the APR, then a year from now the interest-accumulating $500 is gone, and you owe only $500.

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Yes, that was one of the major reforms from the CARD act.

[sexy_kitten7]

The law is actually a little more complicated. The CARD Act states that payments in excess of the min must go toward the highest APR balance.

So in the above 4k revolving, 2k new scenario, a payment of ~$4200 should wipe out the 4k balance.

[Kenny]

+1 to last 4 posts! lol

[MoreRewards]

I love discover.  The cash back is very useful for me. I've received several CLI too. 

If I got an offer like that I would be happy to take it if I needed. If I wanted to purchase something and pay over 5-6 months I know id be able to do that without interest. Itd be a good deal. 

Everyone like different lenders and different lenders are better to different people. With limits, apr, cli its all relevant to what they do for the individual & what meets your needs. 

I'm not fond of cap 1 because if triple pulls and because of the low limit I was given. But some people love them.

[Anonymous]

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@MoreRewards wrote:

I love discover.  The cash back is very useful for me. I've received several CLI too. 

If I got an offer like that I would be happy to take it if I needed. If I wanted to purchase something and pay over 5-6 months I know id be able to do that without interest. Itd be a good deal. 

Everyone like different lenders and different lenders are better to different people. With limits, apr, cli its all relevant to what they do for the individual & what meets your needs. 

I'm not fond of cap 1 because if triple pulls and because of the low limit I was given. But some people love them.

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you might laugh but i logged in today on my Discover IT and see an offer for 12 months 0% balance transfers 0% apr and gives me 3 rows i guess to put whom i want to transfer but could i add discover in there too ? I have balance $1,900 and 10.99% apr going to kick in after this month and wondered if i could swing them in there as a balance transfer too and get it back to 0% apr  3% fee of course.