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Author: Allisonh2 Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308674  
Subject: Capital One Question Date: 10/3/2003 2:47 PM
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I am doing a happy dance today!! For one, I paid off that high interest Gateway acct. at 27.99% (owed 777.00 on it) and paid it off online last night!! Whooohoooo!!

Secondly, I paid off a Capital One credit card also today. But my question is, when I called them up today to request that they lower my APR from 14.9% the representative was quite helpful. She agreed to lower it down 2 points to 12.9%. But then she stated, "We can also lower you down to 9.9% providing you make 4 transactions in the next 30 days or by November 1st. Ok, I just now paid that credit card off, and didn't want to start using it again. But the opportunity to lower it down to 9.9% is pretty tempting ( almost 2 years ago it was at 14.9%) Would you suggest:
1) Purchasing small items 4 times in the next month
2) Paying them off as soon as the bill comes in?

I thought about maybe just charging gas, a small item, etc. 4 times till Nov. 1st, then just paying it off.

I've never heard of this before, has anyone else encountered this? I suppose I could just leave it alone and let it sit at12.9% but there is the temptation to lower down to 9.9%

Anybody have any suggestions? Why the 4 transactions, I wonder? Are they hoping that I get my card racked up again!! No way, I've learned the hard way!!!
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Author: jrsmith13 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 171018 of 308674
Subject: Re: Capital One Question Date: 10/3/2003 3:08 PM
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If you think you MIGHT ever need to use it to carry a balance again, I think I'd buy 4 small things and pay it off. As long as you've changed your spending ways and are disciplined enough to not get back into debt, I'd say got for it!

OF COURSE they are hoping you rack up your card again!

jrsmith13

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Author: dsemmler Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 171020 of 308674
Subject: Re: Capital One Question Date: 10/3/2003 3:17 PM
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I've never heard of this before, has anyone else encountered this? I suppose I could just leave it alone and let it sit at12.9% but there is the temptation to lower down to 9.9%

If the card is empty, I would be inclined to leave it at 12.9% for the time being. Then, if you decide you would like to do a BT to the Capital One card, call them and ask if they have any special BT offers.

You might end up with a rate much better than the 9.9% without having to make any purchases. If you don't plan on doing a BT, then who cares what the rate is because it is paid off and will remain paid off, right!

dt

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Author: Ramsees Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 171022 of 308674
Subject: Re: Capital One Question Date: 10/3/2003 3:36 PM
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I'll do one better: pay off the card entirely each month and pay 0.0% for life!


Ramsees

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Author: n8larson Big gold star, 5000 posts Old School Fool Ticker Guide Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 171036 of 308674
Subject: Re: Capital One Question Date: 10/3/2003 6:34 PM
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Don't let them tempt you... you already know what they're doing and why. Leave it at 12.9% and make them give you a lower BT rate when (if! I mean if!) you actually need low-interest financing for something.

-n8

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Author: NT8 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 171072 of 308674
Subject: Re: Capital One Question Date: 10/4/2003 4:12 PM
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Addressing your question about why 4 times etc..

For the most part credit card companies make money from:
1) Interest
2) Fees (annual, over limit etc)
3) Interchange.

The interchange fee is what a store pays the CC company each time you use a credit card for a purchase or a return at a store that accepts the card. That is why the credit card company is offering you an interest rate reduction based on your activity -- they have carefully calculated how much they need to make in interchange fees to make up the difference CC Company might lose if they reduce your interest rate. So you the consumer may save money..but the stores you shop will pay more based on increased volume.

You've asked if anyone has seen this before..yes! It is a new trend in credit card management. For example Discover has made a few offers of 0% for life etc. With the small print saying that you need to make at least one purchase per month to keep the rate. Discover is trying to combat the people that accept a really good BT -- but then never transact. They want you to transact to increase their interchange revenue since they are making minimal/none in interest.

Hope this sheds a little light.
NT8

PS) Just to let me address another reality based on the interchange fee. I know that some customers get upset when a store requires that you return the purchase on the same credit card you purchased it on. The reason is it is credit card fraud to do otherwise-- since the CC company makes money on that interchange rate for both purchase and returns..and if you return it on a different CC, that original CC company loses out on the interchange revenue. CC companies do not like that!!

I work a second job in retail and customers get so frustrated by this..so I usually up giving them a lesson in CC revenue models. Not that they want to hear it! But it is considered CC fraud if my retail store did this and they would be accountable. Sorry to rant..just got off of work and this was a huge issue for a customer today.







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