Discover Lowered APR When Asked, But High Rate Still Applies To Old Balance!

“I took your advice a while ago on asking your credit card company politely for a lower APR. I asked Discover Card to give me just that.

Things seemed peachy. I called customer service and asked a lower rate and got it without any confrontation, argument or a supervisor. Strange I thought, but OK. I got my 3.9% APR for one year. Great! When I can make those large purchases for my apartment that I need to carry a balance with. Now consider I already had about a $1200 balance to boot.

I thought every time I made a payment it would apply to my oldest charges which are the ones with the 16.24% APR. It would make sense right? Isn’t that how credit cards work? So in my first month with the new rate I made $68.53 worth of purchases and made a $548.79 payment.

So in theory, that $1238.98 balance I had last month at 16.24% APR should now be $690.19 right? Wrong!”

augustdiscover.jpginternetpayment.jpgI started to notice over the past 2 or 3 months. That every payment that is made is applied to the lower APR purchases first. Thereby leaving the bigger balance with the 16.24% APR continue to sit while Discover laughs all the way to the bank.

Here is a shot of September’s statement:discoverseptember.jpgNotice how that balance at 16.24% got bigger! I just want to let other consumers not fall for this deal as I did. To me its like a trick. You think they are helping you out by giving you a lower APR. However it only creates the illusion that you are saving money in an effort to get you to spend more. I like to think of myself as savvy for reading this website however I took the bait on this one.

Not sure what recourse I have here, so in protest I have stopped using Discover for any purchases.

–RJB, Staten Island, NY

Yet another reason to always pay your credit card balances off in full each month. Guess we need to start adding the caveat that when doing a rate lowering, the new rate will probably only apply to new purchases.

3.9% fixed is pretty sweet so we wouldn’t give up on Discover yet. You could still get a new credit card with a lower interest rate and do a balance transfer. Stop buying new stuff and pay it off.

Reader Lowers Credit Card APR From 15.74% To 1.99% By Threatening To Cancel
Is Your Credit Card Rate Higher Than Average? Switch!

(Photo: Getty)


Edit Your Comment

  1. warf0x0r says:

    Yes, stop using it to buy stuff and just pay it off.

  2. Buran says:

    I think they all do this, sadly. The fine print on my cards says so.

    Transfer away to another card with a low transfer balance and pay it off there.

  3. MercuryPDX says:

    Sneaky? Yes, you got nailed on a technicality. You wanted the ENTIRE card on the new rate, but they only gave you a temporary one to apply to NEW charges. Serves as a good warning people to ASK how your lowered rate will be applied, don’t assume your CC company will apply it to your old balance.

    When you pay you bill the money applies as follows: (to use your example screenshot/bill)
    Cash Advances, Promo purchases, regular purchases.

    So say you took a $500 cash advance. You have to pay that off before any money applies to your other purchases further down the chain. There’s no way to shuffle it or change it other than to just pay through it.

    You could still get a new credit card with a lower interest rate and do a balance transfer.

    This is the way to go. I just got a packet of Balance Transfer checks from Chase offering a 1.9% APR on balance transfers until it’s paid off.

  4. sled_dog says:

    When you did not pay your card off, you agreed to the interest rate applicable in that cycle. What’s the problem?

    If you bought gas yesterday and the price went down today, would you be surprised that the station will sell to you at today’s price but not apply it to what you bought yesterday?

  5. Uh oh... Cleveland says:

    They pulled this crap on me and I haven’t used the card for three years now. Every so often they call and ask why I haven’t used the card, and I am more than pleased to tell them.

  6. Mr. Chip says:

    Also sneaky: Stores that offer 0% financing for x years deals. Say you’re like me: You buy a new house, have a couple empty rooms to furnish. Fancying yourself a smart, Consumerist-reading buyer, you know to only purchase items you actually have the money to pay for outright. You also know that 0% down, 0% financing for 1 year is a great deal if you can get 5% on that money in a high-interest savings account.

    For instance, $1000 purchased at 0% down, 0% financing, paid off in full on day 364, means you get an extra $50 off your purchase price if you save your money at 5%, just for using their financing. It’s a great deal.

    So say you take your $1000 of bedroom furniture home, put the room together, and decide you really want that $600 dresser to go with it. But this time, since your purchase is smaller, they only offer you 6 months of 0% down, 0% interest financing. It goes on the store card, you mark the calendar, and you knock $30 off your purchase price.

    When the 6 months is up, and you pay the $600 in full on day 181, what do you think the company is going to do?

    Unless you tell them explicitly, they’re going to apply that $600 to the original $1000 purchase, and hit you with the full 6 mos. interest payments on the dresser. The only way around this generally is to write on the actual check which purchase your payment is meant for, and to follow that up with a call to the credit company to make sure that they apply it correctly.

    Moral of the story: Credit card companies will screw you any way they can. Moving the due dates arbitrarily forward so you miss a payment, applying your payments to balances at lower rates before higher ones, “debt forgiveness insurance” plans, identity theft protection plans, anything they can do to wring every last cent of profit out of you, they will.

  7. ChrisC1234 says:

    Some of these numbers just don’t add up:
    Balance in August $1238.98
    Interest charged $17.09

    $1258.11 + $17.09 = $1256.07

    On the September statement, the amount has inflated to $1258.11. Where did the extra $2.04 come from? Shouldn’t the amount due in September equal the amount due in August + the interest charged for August?

  8. Parting says:

    Aren’t all credit card apply your payments to lower APR balance?

    When I received mail offers for new credit cards, as far as I remember it was written in every ”terms and agreements” section…

  9. j03m0mma says:

    Dood come on what is there to complain about??? Heck I even think it says on every bill you get that all payments will go towards the lowest APR balances 1st. I hope Consumerist is posting this to make other people aware of this instead of saying shame shame on Discover. This is just lack of education by this guy.

  10. Parting says:

    @j03m0mma: Well, he got the APR on the phone and unless he was told by customer service rep, he could not know this. Especially, if this was his first time dealing with lower APRs in general.

    It’s one thing where you get written terms and have to read them. And another, where you simply talk to someone on the phone.

  11. Mr. Gunn says:

    You should know that the money you pay them because you didn’t understand the rules goes to pay for the cashback programs for people who do read the rules. I’ve made ~$300 from Discover and never paid them a cent, so keep it up, buddy!

  12. TravisL says:

    Assuming you don’t have $1238.98 to send them to pay off the more expensive balance, save up $1238.98 over the next month or two by charging the things you’d normally pay cash for. The new charges will be placed on the smaller interest rate, and you’ll have the money to pay off the balance on the higher one.

    Of course, you should be careful not to spend $1600 on new charges to pay off $1238. That’d be counterproductive.

  13. azntg says:

    @ChrisC1234: I believe Discover More runs on a two-cycle process.

    Pay off Discover now or failing that, get a balance transfer. But 3.9% fixed is pretty spectacular!

  14. mantari says:

    There’s an older trick still going on. You’ll love this:

    Your interest rate is low. Say, 8%. They give you balance transfer checks. Say, 5% fixed. Awesome, huh?

    You transfer $5k over to the card. Say you had an existing balance before that, or after the fact you run up a decent balance. Say, $4k. What happens?

    You don’t know it, but you’re trapped. All your payments go towards the $5k balance transfer at 5% fixed. But that 8% on purchases? They run it up the treadmill to 12… 14… 18… 20%.

    Now, you’re stuck with a $5k balance transfer that you’re paying off before you can work down your $4k balance at an outrageous interest rate.

    Welcome to the fixed rate balance transfer trap.

  15. saltmine says:

    “I thought every time I made a payment it would apply to my oldest charges which are the ones with the 16.24% APR. It would make sense right? Isn’t that how credit cards work?”

    No, not at all. That is never how credit cards work. Has this guy ever heard of promotional APRs? I’m not a “blame the victim” type have no sympathy for him.

  16. synergy says:

    I don’t know how exactly this might connect to the OP, but I have a Discover card on which I transferred a balance that had an intro APR of 0% for 6 months which then went up. Clearly in the print Discover pointed out that any payments made to the card would be applied first to low interest balances and then any other charges made to the card. Perhaps the OP didn’t read the print?

  17. krom says:

    I just recently got a Working Assets Visa, which is operated by BOA, and when I did my activation and balance transfer, I was specifically told (rapid-fire disclaimer style) that payments would be applied to earlier purchases before later purchases. I should double-check the fine print, but that’s what he told me, and that may only apply to the W.A. card.

  18. maribars says:

    This is the exact same stunt Citi Bank pulled on me.

    Luckily I was able to pay off the balance in full fairly soon afterwards. Yet another reason to pay off in full every month.

  19. girly says:

    I had a zero percent offer from MBNA. I asked if the thing about payments applying to a balance meant that I essentially had no grace period for purchases.

    They were incapable of answering the question in an understandable way.

  20. Falconfire says:

    @synergy: No it was the OP didnt realize that there is no such thing as one rate, and that all credit cards contain 2 or more rates for various charges.

    Heck I have seen credit cards charge different rates for WHAT you buy.

    Its racket, and its morally wrong, even if its legally ok.

  21. GearheadGeek says:

    Read. The. Terms. BEFORE you charge things. If you don’t know the terms of your credit card, you should learn them NOW or cancel it.

  22. GearheadGeek says:

    @Falconfire: Morally wrong? It would only be morally wrong if they did things that they don’t warn about in the terms, and then it would also be illegal. I know people get all up-in-arms when someone suggests that a good consumer is responsible for his or her actions, spending, etc. but it’s actually TRUE! If they tell you beforehand that it’s 2% interest for charges at grocery stores and 20% for restaurant charges, and you proceed to use your card at a bunch of restaurants, they’ve done nothing immoral (and you’ve done nothing intelligent.)

  23. tedyc03 says:

    I’m one of the reasons why the Consumerist recently wrote about this, and I can tell you exactly why the old APR still applies to the old purchases: you didn’t threaten to transfer the balance.

    The card company would be more than happy to give you a lower rate if you’re carrying a balance because your card agreement specifically says that they’ll direct the payment in the way “most favorable to us (the card issuer).” Read the agreement; it’s in there.

    However, had they believed you were about to transfer the balance they might have retroactively applied it to OLD purchases to keep you from moving the money, and thus reducing their interest income to nothing.

    However there might still be a solution. Call the CSRs again and tell them that you were told that the rate would apply retroactively as well. Tell them that you want them to correct the mistake. If they give you grief threaten to transfer the balance and even ask where to send the payment from their competitor’s card. If they’re hard up for business they’ll do what they can to keep you from transferring the balance. I would; 3.99% is better than nothing.

    And just for anyone with an ethics problem: businesses lie to us all the time (see: marketing schemes). I have no problem lying to them to get what I want.

  24. jbl-az says:

    This is why I use separate cards for purchases and for low-interest transfers. They still put the high interest rate on the cash advance fee, but the advance itself gets the low rate. The overall APR remains pretty low.

    I tend to hold out for life-of-the-balance low rates, but lately only limited-time low rate advances seem to be available.

  25. Crazytree says:

    @Buran: problem is, after the fees, your effective APR will be close to the same in the short term.

  26. astrochimp says:


  27. it5five says:

    Tip: Stop using the card to buy things, and pay it off. I’d have a heart-attack if I ever had any balance left on my card at the end of the month.

  28. RvLeshrac says:

    Every single credit card agreement I have *ever* seen states that all payments will be used to pay off “promotional APR” balances first.

    CC companies aren’t angels, but they aren’t to blame if you completely fail to read the contract.

  29. BigNutty says:

    The fine print is where all the important information is located, but more importantly is getting those credit card balances paid down.

  30. sciencefreak says:

    looks to me like you didn’t read the terms and conditions and this doesn’t seem sneaky to me at all.

    you made the assumption that your entire cards APR was being switched, when the credit card company I am sure never said anything of the sort.

    its the same as if you buy something with a store credit card with a 0% APR…it does not apply to previous purchases.

    Personally I agree with the fellow posters, don’t spend so much on your credit card. If you don’t have the money for something, don’t buy it. Personally the only time I Don’t pay my credit card balance in full is if it is on some 0 interest deal and I’m feeling lazy (though I will still have the money to pay for the item in full if i want to)

    never buy any sort of consumer product unless you have the money for it…buying it otherwise is just a bad idea. There is NEVER an excuse to get into debt for a consumer product…you need 2 things to live, food and shelter, anything else is unnecessary and should not be bought unless you can afford it (ill make an exception for a car…but not for a plasma TV or a computer).


  31. jaredharley says:

    @RvLeshrac: Exactly.

    And to everyone who says “X bank also pulls this stunt/trick/scheme/etc”: It isn’t a trick, a scheme, or a stunt. The bank is a business. They want to make money. No, they’re NEVER going to do what’s in your best interest, because that won’t make them money.

    It’s not that they’re trying to screw you, but YES – they really are trying to make money off of you.

  32. Vicky says:

    I was able to get American Express to lower my balance across the board. The rep offered what I would characterize as “rehearsed” resistance and I simply replied with “I think you should reconsider” and he said ok. Just be sure to ask for the right thing.

  33. frankblevins says:

    I don’t want to sound like a radical but I have no credit cards and haven’t since 1990. I have no use for them. I don’t care what rate your offered, cash is always cheaper. I have a checking account with a local credit union with free checking and use the debit card to purchase anything I would need a credit card to purchase, except rental cars. To be honest it can be just as cheap to take a cab or public bus and do without a rental car. Everyone talks about what a rip-off payday loan and title loan companies are…and they are. But all bank credit cards are also rip-offs. They are masters of fine print and ever changing rules. We don’t need to discuss cash advances do we on your credit cards, do we?

    I never buy anything I cannot pay for in cash, including a car. I usually buy a new or very near new car about every five years. I save whatever the car payment would be in a simple intrest savings account. When I’m ready to buy a car I already have most or all the money. I have bought three autos this way.

    A house is an entirely different matter. I purchased my house back in the days when I still used credit. I know you need a credit rating to get a loan but I think credit ratings themselves are a scam.

    I’m sure some of you think I am a cheap and smug person. No, the fact is I have everything I want. The only difference between me and many others is since I don’t rob Peter to pay Paul, I have lots of cash available.

    “What’s in your wallet”?

  34. JustAGuy2 says:


    I’m glad to hear you aren’t overextending yourself. The fact that you’re giving up automatic discounts and have a lower savings balance than you need to because you don’t use credit cards is completely your call. Maybe you don’t have the self-control to get the benefits from credit cards. If you don’t, you shouldn’t have one, but don’t try to pretend that it’s a good thing.

  35. JustAGuy2 says:

    Generally, credit card payments are applied to your lowest interest rate balances first, moving up the rate chain. This is usually in the not-very-fine print.

  36. frankblevins says:


    The fact is I have a higher savings balance because of my “call” not to use credit cards. Currently I have almost $12,000 saved toward my next auto. My guess most people don’t have that in savings. I also have a very healthy 401(k) for retirement. “Discounts” for buying with credit cards mean little when you pay interest over a period of time. Just do the math. I don’t “pretend” paying with cash is a good thing, I know it is.

  37. JustAGuy2 says:


    You’re setting up a strawman argument. Paying with credit cards and paying interest on credit cards are two completely different things – it’s sort of like arguing “never drive, always walk, because if you drive, you will decide to drive on the sidewalk and run over pedestrians, and therefore go to jail.”

    I get the discounts and never pay any interest – in fact, the credit card company pays me interest by giving me an interest free loan, so that I earn more interest in my savings account, plus the cash back. I’m not advocating carrying credit card balances (stupid), but rather using credit cards as payment tools (smart).

    As for $12k savings, I have a lot more than that in near/medium-term savings, thanks, and my 401(k), which I’ve maxed every year since I’ve been working, is a relatively small portion of my retirement savings. Frankly, I don’t relish the idea of retiring with just $1MM (in current dollar terms) in savings.

  38. frankblevins says:

    Hmmm…a straw man argument indeed. I agree that paying with credit cards and interest with credit cards are two completely different things. But we both know most people pay the interest on the things they buy with credit cards. You do sound like you have a lot of fiscal discipline. So do I and I’m more than a little put off by your suggesting that I don’t. BTW the $12,000 in savings I mentioned is only for a car, I also have other savings. I never buy on impulse; I save for what I want. You know, you’re not much different than me. You appear to pay your bills as they come in, I pay mine as I purchase. Props to you for getting deals with credit but that’s not the case with most people. The sad truth is that most people are enslaved by credit card debt. Banks make it much too easy to buy now and pay forever.

  39. JustAGuy2 says:

    Well, we certainly agree that credit cards aren’t good tools for people without fiscal discipline. Kudos to you on your savings discipline – any idea what the next set of wheels will be?

  40. BugMeNot2 says:

    > It’s not that they’re trying to screw you, but YES – they really are trying to make money off of you.

    In other words, YES – they are trying to screw you. They just don’t want you to notice.

  41. Can you not do the following?
    1. Transfer the entire balance off Discover, minus the 3.9% portion, onto another card.
    2. Transfer the entire balance from the second card immediately back onto the Discover card.
    3. Cancel the second card.

  42. JustAGuy2 says:

    @Prolific Programmer:

    Can’t do it – a balance transfer away from Discover would be treated like a payment, and that payment would be applied to the low interest balance first. The entire card needs to be paid off.

  43. jbl-az says:

    @JustAGuy2: Re This is usually in the not-very-fine print: As a matter of fact, in the last application I signed, the statement that promotional balances would be paid first was in bold print. But of course you have to at least scan the fine print.

  44. leshrac55 says:

    It’s BS, but this is the way all the CC’s work. One of my CC’s just offered me 0% on balance transfers. Great, right? Well, only great if you’re not going to use the card at all, since if you use the card, you pay off only your 0% balance first, basically negating the whole point of having a 0% balance transfer option. It feels like it should be illegal since it’s so deceptive, but that’s what they do.


  45. billmarty says:


    Are you serious? Criticizing someone for having too low a savings balance because they DON’T use credit cards? If the only way you can maintain any money in savings is by spending everything on credit card you don’t have a good plan, you have denial.

    I am seeing too many people failing to factor in administration and risk. Take the example above where we got $50 off a $1000 purchase by going 0%. How much is it worth not having to fiddle with another monthly bill for twelve months? What about the risk of accidentally (or otherwise) paying late or not finishing the balance? Then you are taking a several hundred dollar hit on your brilliant plan that was going to net you fifty if it worked! Nevermind the obvious question – how many people that have these grand plans actually put the money in savings and leave it there? They’ve already proven they don’t have patience..

    If you can really afford it, pay for it. If you are using gimmicks to push it through – maybe you really can’t.

  46. RvLeshrac says:


    It *ISN’T DECEPTIVE AT ALL*, that’s the problem here. If I walk up to you and tell you that I’m going to give you $100 and then punch you in the nuts with a set of steel knuckles, you can’t complain when I punch you in the nuts with steel knuckles seconds after giving you the $100.

    The credit card agreement *always* *explicitly* states that all payments will be applied toward promotional balances first, and they *rarely*, if *ever*, shove it into the fine print! My CapitalOne, Bank of America, and Citi cards all have it in the main body of the card agreement, *and* they include it in any promotional (balance transfer checks) materials they send me. The CapitalOne and Citi cards even have it in bold.

  47. anatak says:

    “To me its like a trick.”

    Yes, yes it is and you should expect this when dealing with scum. This is why the whole “I can get them to lower the interest with one phone call” game is not a plan. Cutting up the cards, working hard to pay them off, and canceling the accounts, is.

  48. Solange82200 says:

    @sled_dog: I don’t think you understand what his complaint refers to. Not so much that the interest rate didnt apply to his previous balance, but the fact that he sent a payment in and they used that payment toward his new, low-interest balance. Therefore, the balance with the higher interest sits there collecting interest for as long as possible. Considering that the high interest balance came first, you would think they would apply it towards that, but they didn’t. All he is saying is to watch out for that, so you don’t unknowingly accrue all that extra interest on your old balance.

  49. RvLeshrac says:


    But that’s a totally invalid complaint. As I said, that’s the problem here.

    You *WOULDN’T* think it was going to apply to the higher-interest balance if you *READ THE CARD AGREEMENT*, which is actually *VERY EASY* to understand. The reason the companies make the card agreements so easy to understand is because it prevents a lot of bad publicity… and with a lot of the news you see about them, it is fairly obvious that they can’t afford much additional bad publicity.

  50. Pender says:

    Wow. Maybe you’ve got a point and maybe you don’t, but I can’t really bring myself to care. Just pay off your credit card and stop living in debt.