No. of Recommendations: 1
Hey all ...

I have in my possession an offer from Discover offering 0% for life on all balance transfers subject to the following terms:

* The balance transfer fee is 3%, with a minimum of $5 and a maximum of $50
* I must make at least 2 purchases on the card each month (which will collect interest at the standard rate of 12.99%)
* The computation method is two-cycle average daily balance
* Payments will be allocated to the lowest APR first -- in this case, the 0%.
* The minimum finance charge is 50¢ per month.
* There is no annual fee

For the record, I am a sophisticated user of credit. I pay my "normal" CCs in full each month and carry balances only under the following circumstances:
* A deferred financing offer (no interest for 12 months, etc.)
* Low rate balance transfers allowing me to "borrow funds" at a better rate -- I currently have one (AT&T Universal) at 3.99% for life which acts as an installment loan (it carries former student loan debt that was at 6.875%).

I am thinking about moving as much of my remaining student loan debt to this new Discover card if I opt to take advantage of this offer. Currently, my student loan debt is $18,000 at 6.875%. My scheduled payment on the loan is just over $300 per month and I typically overpay it by at least $125 per month. I am not eligible for the interst deduction.

If I moved to the Discover card, I'd save over $1,000 a year in interest, less any interest collected on the card due to the balance transfer fee and the minimum purchases. The BT fee will cost me $6.50 per year in interest -- if I two purchases of $10 each each month, they will cost me another $2.60 in interest per month (about $30 a year), compounded of course. I would receive 1% back on any purchases made (a nominal amount given how I intend to use this card). I anticipate my total interest could rise to $50 or $60 a year for the next four years until the $18,000 is paid - but I will still have saved over $2,000 in the process. My payment to Discover would be in the same amount I used to make to Sallie Mae (minimum of $425 per month).

Before I leap, however, your opinions.

1. Have you done this kind of manuever (with minimum purchases)? How did it work out?
2. What concerns or issues did you have?
3. Did you transfer amounts similar to my intention?
4. Other thoughts?


CPAScott
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