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deadbeavis

Discover -- Making purchases with 0% Bal Promo Balance

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I inquired about this with my Discover card prior to making purchases before I did one just to see what would happen.

CSR said to avoid purchase interest payments exceeding min due are first applied to charges subject to higher APRs.

 

Keeping that in mind--

Balance was 0

Transferred $7k at 0 % APR

Purchase APR is 12.5%

Made a 9.00 purchase 7/12

Once it posted a few days later paid the 9.00

Paid the min due  at closing 7/23

Got my next statement

no interest charged.

Paid the min due at next closing

Got the next statement

Charged 1.37 interest.

Asked CSR -- they said avoiding higher interest on purchase was NOT guaranteed carrying a balance with lower APR.

I asked them to again outline how this works.

They could not explain clearly, only to state I should avoid making purchases if I am used to paying in full.

So why have a rule to avoid interest on higher APR if its not guaranteed?

 

Meanwhile, checked with Amex and it's exactly as expected:

I am offered a Grace period for purchases with higher APRs carrying a balance with lower APRs.

As long as I make the payments before the closing date and its covers the purchase balance (above min due), there is no interest assessed.

 

Its seems Discover is taking advantage by charging interest immediately after using the card for purchases with a baiting promo offer.

I don't think anyone in their right mind would stand for interest being charged immediately after a purchase, which is what is seems to be.

 

 

 

 

Edited by deadbeavis

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1 hour ago, deadbeavis said:

I inquired about this with my Discover card prior to making purchases before I did one just to see what would happen.

CSR said to avoid purchase interest payments exceeding min due are first applied to charges subject to higher APRs.

 

Keeping that in mind--

Balance was 0

Transferred $7k at 0 % APR

Purchase APR is 12.5%

Made a 9.00 purchase 7/12

Once it posted a few days later paid the 9.00

Paid the min due  at closing 7/23

Got my next statement

no interest charged.

Paid the min due at next closing

Got the next statement

Charged 1.37 interest.

Asked CSR -- they said avoiding higher interest on purchase was NOT guaranteed carrying a balance with lower APR.

I asked them to again outline how this works.

They could not explain clearly, only to state I should avoid making purchases if I am used to paying in full.

So why have a rule to avoid interest on higher APR if its not guaranteed?

 

Meanwhile, checked with Amex and it's exactly as expected:

I am offered a Grace period for purchases with higher APRs carrying a balance with lower APRs.

As long as I make the payments before the closing date and its covers the purchase balance (above min due), there is no interest assessed.

 

Its seems Discover is taking advantage by charging interest immediately after using the card for purchases with a baiting promo offer.

I don't think anyone in their right mind would stand for interest being charged immediately after a purchase, which is what is seems to be.

 

Amex marches to a different drummer than most issuers.  Obviously, your card agreement governs how interest is charged.  In my experience, most (not all) issuers stipulate that if any prior balance has been billed on a statement and that statement isn't paid in full by it's due date, interest charges will be assessed on ALL balances outstanding in that statement period at applicable rates (the grace period is forfeit).

 

One issuer that is notable for having a policy that is an exception to this is Barclays.  If you pay in full all charges from your statement on which interest is otherwise assessed by that statement's due date (and haven't rolled any charges forward from a prior statement without likewise paying them in full), then the grace period is intact even if you're revolving a 0% promotional balance.  In fact, Barclays states the minimum payment necessary to avoid any finance charges directly on your statement.

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Your payment did go to the higher interest balance. 

 

What you failed to take into account is that the balance you are carrying eliminates your grace period. So you paid interest on that purchase from the day it posted until you paid it off. 

 

That's why you don't use a card for purchases when you're carrying a promo BT balance. 

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Say what you may about Cap One but using it for a BT puts the BT in a separate bucket and using the card for purchases doesn’t affect the BT. Plus you may get only a 2% fee or sometimes a 0 fee promo.

Edited by StantheMan

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