Discover: 0% APR For Life Decoded

Discover has been sending out targeted marketing for their 0% APR for life offer, and Reader Marcia is curious: “What’s the catch?”

Discover’s 0% APR “For Life” offer is for balance transfers. It provides that as long as you maintain 2 transactions per month, you can keep your “intro” 0% APR on your balance transfer…for life.

The Catch:
The reason you are required to maintain at least 2 transactions per month is that any payments you make to Discover are applied to the amount with the lowest interest rate. Meaning you have to pay off your entire balance before any of the money you pay is applied to the new (higher APR) charges. From

    Payment Allocation: We apply payments and credits to balances with low introductory/special APRs (such as special balance transfer and purchase APRs) prior to balances with standard APRs. Therefore, your savings will be reduced by making additional transactions or having balances that are subject to standard APRs. In addition, the length of time the introductory/special APRs will apply to your account may be reduced by the amount of your payments.

So that’s the catch, and now you know! As far as we can tell, there’s nothing stopping you from buying 2 packs of gum each month and using this opportunity to pay off your balance. Any more suggestions? Something we missed? Reasons not to use Discover? Let’s hear them in the comments.—MEGHANN MARCO


Edit Your Comment

  1. matt1978 says:

    I’ve had this deal going for over two years. It’s not bad at all. You have to make 3 purchases a billing period. They can be for any amount, 3 separate packs of gum in my case.

  2. kerry says:

    I don’t have this deal, as when I got my Discover card I didn’t have any other cards. I chose a Discover card as my first credit card because my mom and sister were so happy with theirs. It’s the only credit card I use, and overall I’ve been really happy with their customer service and fraud protection. When my wallet was stolen a couple years ago they realized it before I did and called to tell me there were suspicious charges being made. Also, when they changed their billing cycle and I wanted my old due date back they actually reset me to the older, longer billing cycle without me even asking.
    In my experience (a customer for about 5 years now, admittedly not a huge amount of time) Discover = Good people.
    I should note that I have a low credit limit and pay my balance in full every month, so I’m not an expert when it comes to finance charges, etc.

  3. ganzhimself says:

    Applying your payments to the lower percentage balances first is a pretty standard practice as far as credit card companies go. If they didn’t require the 3 transactions a month it would be much like my Capital One card. I don’t really mind, at least the transfer balances are getting paid off, and that balance is WAY higher than the other balances.

  4. bmac says:

    “In addition, the length of time the introductory/special APRs will apply to your account may be reduced by the amount of your payments.”

    Does this mean if they determine you aren’t spending enough (e.g., if they decide 3 packs of gum isn’t enough) that they can take away your 0%?

  5. Joe_Bagadonuts says:

    Is there a minimum purchase amount? ‘Cause if you’re really good on the gas pump you could put $0.01 in your tank 3 times a month or however many times a transaction is required. Would that work?

  6. The fact that your payments are applied to the lowest interest rate portion of your balance is true for every single card, not just Discover. And Discover, just like every other card, can increase your interest rate for no reason as long as they give you two weeks notice.

  7. bartinpc says:

    I have this exact plan. Early in ’06 I got the offer, it was 0% interest for the rest of the year, then it would continue to be 0% as long as I followed their “purchase plan” (or some such vague phrase).

    Since the paperwork didn’t explain it at the time, I called them early that year, and she explained it pretty much as the way the post indicates. She said it didn’t matter the amount of the purchase…just that I made two purchases during the payment period. Since I have two Tivo subscriptions that come out at different times in the month, that was an easy way for me to charge a small amount to the card each month to maintain the 0% rate.

    They are obviously hoping you forget to make the two purchases a month and then they can automatically start applying their interest. It’s allowed me to kill my other credit card’s debt, because all I gotta do with Discover is make the small minimum payment (no real incentive to pay it off faster now). You can concentrate your extra cash to more immediate concerns.

  8. AcilletaM says:

    One of the first cards I had and the first I got rid of. Horrible, horrible when I had financial troubles and they wouldn’t play nicely with the credit counseling service (a reputable one BTW) I used. I now refuse to have anything to do with them and if I ever own a business, will not accept them or advertise them. Which is an issue with my girlfriend, an employee of Discover Financial, the network side of the credit card. I’ved turned down many free things because of it.

    And just for fun, here’s one of my favorite dialogs from Futurama (and one my girlfriend is sick of hearing)

    Fry: Do you take Visa?
    Clerk: Visa has not existed in 300 years.
    Fry: American Express?
    Clerk: 600 years.
    Fry: Discover Card?
    Clerk: I’m sorry, we don’t take Discover.

    It’s funny because it’s true.

  9. indigohat says:

    I took them up on this deal and it’s been great. When I figured out what the ‘catch’ on the phone with them whilst opening my account, I almost declined but it actually works out to be a great deal for me.

    I transferred $5000 at 0% for the life of the balance with no transfer fee. I was being charged 7% on that $5000 on my old credit card and by transferring it, that immediately stopped. If I make 3 purchases a month for a dollar and I can’t pay them off till I’ve paid off the $5000 balance (standard practice), they are only accruing pennies a month – as opposed to the amount that the $5000 of debt WOULD have been accruing on my old credit card.

    So it’s a great deal for someone trying to pay off debt, like myself, in my opinion. It’s saved me hundreds already.

  10. synergy says:

    I have this offer. I transferred a nasty balance from Citi (:p) and I use Discover for most of my transactions like going to the movies and buying groceries where I’d otherwise use my bank card. Then when I get paid I pay off all of what I charged with the untouched money in my bank account plus some for the transferred balance.

  11. synergy says:

    Oh and the point to using the Discover is that I have 5% cash back too. So since October I’ve made a couple of bucks off purchases I would’ve made anyway with my bank card.

  12. matto says:

    I took advantage of a similar, limited-time offer from Discover as well.

    Twice a month, I’d stop in at Starbucks on the way to work, with my own coffee thermos cup, and purchase a 90 cent refill. Having pity on the barrista ringing up the 90 cent credit card transaction, I would tip a dollar.

    Worked great, and I kept my 0% APR on the balance transfer for a year while I paid it off.

  13. RevRagnarok says:

    I have had this since 2004 with 2 purchase a month minimum.

    I have Wikipedia automagically withdrawing a $1 donation every month from PayPal. Every month when I get that email from PayPal saying it’s about to send, I send $1 (again with PayPal) to a random website donation (usually a web comic like PvP or my Linux distro CentOS). I have a $78 balance so 39 months I guess. I took $10K from them at 0% and transferred it to my HELOC (which happens to have a Visa-looking number) so a good 1/3 of my Honda Pilot is on it. My credit rating probably doesn’t look as good, but now my spare money funnels into ING…

    The “catch” is the minimum finance charge of 50c and the minimum-by-law monthly payment.

  14. a10thunder says:

    I recently got this card. It’s an excellent way to pay off large credit card debts. I don’t think Discover has free balance transfer anymore. They will charge up to $50 for each balance transfer. And like any other purchase, the balance transfer fee will be subject to the higher APR.

    Also, you do not have to do the minimum 2 transactions/month immediately after getting the card. I got my card in January and customer service told me that I wouldn’t have to make transactions on the card until July. So if you’re getting this card, call Discover and get all the details.

  15. drsmith says:

    One point I should make here. Check your agreement for a minimum interest charge amount. If the minimum interest charge per billing cycle is $1.00 and you make two 1 cent purchases, you are in effect paying 500% interest for one billing cycle. That interest rate will drop some the following month to 250%(when it’s 4 cents and the minimum is still $1).

    It’s not much, I know. All I’m saying is pay attention to the minimum interest charge and make sure it’s worth it before you decide this is really a great deal. I’m not sure what Discover’s minimum is – I haven’t used my card in many years.

  16. drsmith says:

    D’oh. My math could be better! 500% should be 5000% (1.00 / 0.02 * 100)

  17. scubasue says:

    For those of you that have this card, what is the minimum payment?

  18. RevRagnarok says:

    Minimum payment is the 2% required by law I believe.

  19. sublimnl says:

    Guys, you can use this website to setup automatic weekly donations with your Discover card. This way, you minimize your finance charges, help out a good cause, and don’t ever have to worry about making those 2 required transactions every month. I just used this to setup 300 weekly transactions of 50 cents a piece. My e-mail receipt confirmed that they will charge my Discover card 50 cents every Monday! w00t!

  20. RevRagnarok says:

    I’d rather do wikipedia which has an auto donation mode… I do CentOS by hand when I get the WP reminder email.

    Check your agreement. Mine is 2 purchases a month at $1 min. $0.50 wouldn’t get me anywhere.