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Is a 0% for life balance transfer offer a good deal?

Discover More credit card is offering me a 0% for life on a balance transfers with a 3% balance transfer fee but starting in December I have to charge $50 every month or I lose that rate. Is this a good offer? I would like to transfer over $10,000. I will be paying about $500 a month to pay down the balance transfer. If you think this is a bad offer can you please explain why. Also I called to see if they could cap the balance transfer fee and they said no. Has any one had any luck on Discover capping their fee. Thanks.

Public Comments

1. it's only one facet of the issue. What really matters is what the other rates are. (How much interest you'll end up paying in your balance while you're working on paying it down.)
2. Maybe. In addition to the 3% fee (no you won't get that capped), they are requiring you to charge $50 each month. What's the regular interest rate? Your payments will all go to the lowest interest rate balance -- all to the 0% portion. That's the way credit card companies apply payments. Meanwhile, those $50 charges will be adding up and incurring interest at the regular rate. Also, are you sure the credit limit would be sufficient to handle $10K? In the current economy, credit card companies are not offering such large account limits. One more thing to consider. You have to make sure all payments are on time. Discover is one of those companies where you really need to make sure your payment will be received the business day before the last business day before the due date -- ie, if the due date falls on Saturday, the payment needs to be there on Thursday. One day late and the whole balance reverts to the regular rate.
3. Not a real deal at all. You charge $50 per month, but none of your payment will go toward that balance until the 0% balance transfer is paid off; all will to toward the $10k. So, after 20 months, your charge balance will be $1000 (or more) and you'll be accumulating interest at about 1.5% PER MONTH on the balance as it accumulates. It will take 20 months to pay off the $10k @ $500 per month. In 20 months, you'll accumulate $1,000 credit card debt. So, each month your credit balance will look something like this with an 18% annual interest rate (1.5% per month). You'll pay $212 interest on the CC debt PLUS $300 on the balance transfer. Total cost to you is $512 minimum. The bank knows that by human nature, you will charge more than $50 per month, increasing the accumulated interest charges over the term of the agreement. If you charge $100 per month (most people will charge more), you'll pay $424 in accumulated interest PLUS $300 transfer fee: Total $724 over the term of the agreement. You can guess what will happen if you charge almost all of your purchases - a HUGE credit card debt and a drop in your FICO score At $1000 per month (gas, dining, entertainment, groceries, etc), your total CC debt will be $24,250 by the time you pay off the balance transfer. The bank also has a clause that says they can change the agreement at any time for any reason. Be careful!