Question about interest on new purchase with Discover (compared to BT)

[asot6]

I got my Discover IT card back in October and transferred a pretty hefty balance on there.  I applied through the Amazon link so any new purchase within 3 months would get me a $75-100 gift card from them (not sure on exact amount).  I just made my first purchase last night on there with my Discover for a little under $50.

I have the 18 months 0% apr on BT and it's 6 months on new purchases.  I actually plan on utilizing at least 12 months of the BT rate so I'm in no rush to pay off--but as I just made my first new purchase, how can I be sure I won't actually pay interest on this?  My first monthly payment for $140 is due in a couple weeks so if I paid say ~$200, would that assure me I wouldn't pay any interest on that small purchase after 6 months? Just to be sure, should I also over pay the next monthly payment by about the same amount (couldn't hurt right)?

[Membersince2013]

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@asot6 wrote:

I got my Discover IT card back in October and transferred a pretty hefty balance on there.  I applied through the Amazon link so any new purchase within 3 months would get me a $75-100 gift card from them (not sure on exact amount).  I just made my first purchase last night on there with my Discover for a little under $50.

I have the 18 months 0% apr on BT and it's 6 months on new purchases.  I actually plan on utilizing at least 12 months of the BT rate so I'm in no rush to pay off--but as I just made my first new purchase, how can I be sure I won't actually pay interest on this?  My first monthly payment for $140 is due in a couple weeks so if I paid say ~$200, would that assure me I wouldn't pay any interest on that small purchase after 6 months? Just to be sure, should I also over pay the next monthly payment by about the same amount (couldn't hurt right)?

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As far as i know, you can keep paying the minimum until your last statement at the 6 month mark. After your 6th statement, you'd have to pay the statement balance to avoid interest.

[asot6]

Ouch. So basically, no matter the amount of the new purchase, this will always override the BT time frame and I'll start owing interest on that portion too?  Even if I were to say, over pay my monthly due balance for the next few months?

If it's too much hassle I may as well cancel that payment and pay with a different card. 

[Membersince2013]

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@asot6 wrote:

Ouch. So basically, no matter the amount of the new purchase, this will always override the BT time frame and I'll start owing interest on that portion too?  Even if I were to say, over pay my monthly due balance for the next few months?

If it's too much hassle I may as well cancel that payment and pay with a different card. 

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I'm not exactly sure what you're asking me here, but i'll try to explain it in another way.

Lets say Discover approved me for a 7K CL with 0% APR on Purchases for 6 months (after 6 months APR becomes 15.99%) and 0% APR on BT for 18 months (after 18 months APR becomes 15.99%) in Jan of 2015. I make a purchase of $600 a couple of days after getting the card then do a balance transfer for $500. Assuming i make the monthly minimum payment up until July, i will not get charged any interest on that $600. If i keep making minimum payments from July till Aug, i'll get charged interest of 15.99%/12 = 1.3325%/100 = 0.013325 * balance at the end of my Aug statement and other statements there after until i pay in full (you'll also have to pay the balance + interest fees in full in order for you balance to be reported as 0)

As far as the BT goes, the APR will be 0% until July 2016. After my July statement, i'll get charged 0.013325% per statement on the BT (assuming you've never paid your entire balance in full). 

Every payment you make will be adminstered towards the purchase balance, unless you make a payment more than the purchase balance or PIF.

Hope this helps a little.

[NRB525]

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@asot6 wrote:

Ouch. So basically, no matter the amount of the new purchase, this will always override the BT time frame and I'll start owing interest on that portion too?  Even if I were to say, over pay my monthly due balance for the next few months?

If it's too much hassle I may as well cancel that payment and pay with a different card. 

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Time out.

There are rules, specified in the fine print of your new credit card agreement. Here are the general outlines of what should happen:

Check the "calculation of interest" section of your monthly statement:

1) You have a balance on your statement related to a low or zero rate BT amount. That has an 18 month clock specific to that amount. That should be contributing zero or a small amount to your "current month interest" total.

2) There is another balance identified as "Purchases" or "Purchase Offer #x" that specifies the amount on that 6-month clock. For now, it sounds like that should be contributing zero to interest cost.

3) If you buy other items that are NOT on a special offer, they will show up as "Purchases" and may show an interest charge.

Now, the typical card agreement uses your monthly payments in this order:

1) Pay late fees (you should have none of these)

2) Pay "current month" calculated interest. This will start to appear at the expiration of the 6-month purchase offer.

3) Pay the remainder of the Minimum Payment amount on the lowest APR balance that is open. 7 months from now, this will be the Balance Transfer 18 month offer, so this portion of the minimum payment will start paying principal on that BT offer.

4) Any amounts over the minium payment are applied to the highest APR principal balances first. This means on the month 6 statement, you can pay an amount over the minimum payment amount by the amount of charges on this 6-month purchase offer, and have those paid off. The 18-month balance transfer continues to run with it's own balance, it's own zero interest calculation bucket.

The issue of "all charges start to record interest" is the situation where you have been PIF, and one month do not pay in full so start all new purchases added to the card with an interest clock from when those purchases are made. That is a different situation from a specific BT offer, which isolates those amounts in a BT calculation.

[asot6]

^^^ Ahh, I got it.  That's what I invisioned but just wanted to be sure. Thank you so much!