Some time ago, Discover Card made me an offer that I couldn't refuse: Transfer any balances I wanted, up to my credit limit, and enjoy a 0% interest rate on that balance--indefinitely. The catch: I had to use my Discover Card at least once a month, and any purchases I made would accrue interest at 10.99% until I paid off my initial balance transfers (see John Delano's first comment on this post for more details). I typically don't use a credit card, so I decided that I'd just set up a monthly donation to some organization. With that plan in mind, I maxed out the card by transferring a couple of loans.Then the search began for an organization that would accept monthly donations while meeting certain criteria:
- Reliable withdrawals. This is the most important criteria; if the organization fails me, Discover would raise my rate from 0% to 10.99%. Remember, my card was now maxed out--so this is a big deal.
- Tiny minimum. Several organizations don't want to process credit card donations unless you're donating at least $5. That's $60/year, which is fine if you're actually wanting to donate, but not fine if you're just looking to save money.
- Easy cancellation. If I have to jump through hoops to cancel the monthly donations, I'm not interested.
- Decent purpose. I wasn't about to donate to research on human/animal hybrids or something crazy. I needed something idealogically agreeable.
I first tried the Republican National Committee. To make a long story short: they were unreliable, and Discover ended up raising my rate to 10.99% after the RNC skipped a month. Thankfully Discover gave me a 1-time reprieve, and I got back to 0%. Now I had to find another organization.
The IRC (International Rescue Committee) has been terrific. They are reliable, they send an email every time I donate (which is nice when you need/want confirmation that you've met Discover's requirement), they allow me to see my donation history online, they allow me to edit my upcoming donations, and I can cancel anytime online. A $1/month donation is keeping my Discover Card interest rate at 0%, and the IRC's apparent efficiency makes me suspect that it's not hurting the IRC one bit. (I may be using them, but I don't want to cost them money.) If you're in a similar situation with a special rate on your credit card, consider the IRC.
6 comments:
Does Discover have a limit on how long they will maintain the 0% rate?
Why not buy gas on the card each month, and then just send the check when the bill comes?
I have a similar deal with one of my cards, except the rate is at 3.99%. You don't want to spend any money on that card if you don't have to, because the credit card will apply new purchases at a higher interest rate, and any payment you make applies to the lowest interest rate balance first. In other words, if you had a $5000 balance at 0% and purchased gas each month for, say $30, at the end of the year, you'd have $360 on your card being charged the full 10.99% rate, and the only way to reduce that balance is to first pay off the $5000 balance. If you apply only $1 per month to a donation, then you're stuck with a $12 additional balance each year -- much better.
John is absolutely right. In fact, I was thinking about a future post about this very issue. It's easy to get caught in this trap; happened to me once.
d4v34x, there is no limit on the 0% deal as long as I make a purchase each month; that's why I'm doing it.
And in case I misled anybody, the 0% isn't a standard deal; I got it when I called to cancel my card. But like John said, other card companies may offer similar low-interest deals, so just keep the IRC in mind if you need a reliable and trouble-free way to make the required monthly purchases.
Any thoughts on cash back cards. We've been using a Citi bank card and get 5% back on gasoline and grocery purchases, but limited to $300 year which we usually get by September. Got a notice for a similar American Express deal for 5% on gasoline, office supplies and telecommunications. I'll use one card for groceries and one for gas. I don't know how they make any money, last year they sent me $300 and of course I pay off the bill every month so I'm only charged 50 cent minimum finance charge x 12 months <$6 a year> They paid me $294 to use there money, I don't have a problem with that.
Tim, I have considered getting a cash back card, and I should probably do that--especially after hearing how much you get back yourself. But above all, I require 3 features on any credit card I get:
1) A 0-fraud-liability policy. If my card is used for fraudulent charges either online or offline, I don't want to be liable for those charges.
2) An automated "pay the entire balance" option. Some card companies offer no good way to pay off the entire balance every month using ACH or an eBill. I don't like to think about my payments.
3) A low interest rate (10.99% or better).
If/when I find a card with those features AND cash back, I think I'll go for it. Any suggestions?
I do pay my entire balance every month, so interest rates don't matter to me, I can view and pay my bill online, (I think through paypal, it's been a while, Amy takes care of that now), I doubt they offer an automatic payment option, because they are hoping I will forget to pay on time, so they can rack up the unreasonable interest rate and late fee even for only a day. I'm not sure about fraud protection, though I should. I will look into it, for my own sake.
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