Master Your Card

This week we review the Discover More Card.

Apply for the Discover® More(SM) Card now.

What we like about it…

• 0% interest rate on balance transfers for 12 months. If you use it properly, this time will give you a great opportunity to put a big dent in your credit card debt.
• 0% interest rate on purchases. Really handy if you use it responsibly.
• No annual fee
• Unlimited cash rewards (up to 20% when you shop online at certain stores)
• Up to 1% cash back on all other purchases automatically
• 25-55 interest free days on purchases (but only if you don’t carry any revolving debt!)

What’s not so cool about it…

They recently got rid of the 75$ cap on balance transfers. It’s now 3% of the balance (or $10, whichever is higher), which means there’s really not much of a difference unless you’re transferring over $XXXX, but it’s still a shame. Sadly, it’s a sign of the times - the fee-capped balance transfer may be a thing of the past.

So is the balance transfer offer worth your while?

Generally speaking, if you have any revolving debt (i.e. debt that is currently accruing interest) on other credit cards, you’ll wind up saving a significant amount of money in interest (and pay your debts off faster) even with the 3% balance transfer fee.

Having said that, make sure you keep the following things in mind:

1. If you don’t change your spending habits, you’ll end up in an even worse situation when your intro rate expires. The bottom line is that if you carry a revolving balance on your credit card, you’re not using it properly. One of these offers can really help to get things back on track, but only if you use it responsibly and stop doing whatever caused you to rack up credit card debt in the first place. Failing to change your ways will almost inevitably land you in even more trouble 6-12 months down the road.

2. You still need to meet the minimum repayment requirements on the card. The whole 0% interest thing is a bit misleading, actually. While you don’t technically need to pay any interest on your balance, you still need to make minimum repayment requirements. This is usually between 2 and 4 percent of your outstanding balance, but it varies from card to card. Bottom line: keep an eye on your monthly statements!

3. Missing even a single payment could mean you forfeit the rest of your introductory period. Paying even a few hours late or a few dollars under the minimum and you could lose your 0% introductory rate for good (not to mention the fact that you wont be doing your credit rating any favours).

4. Keep making repayments on your old card(s) until you’re sure the balance transfer has gone through. It can take anywhere between a few days and a few months for your balance to be transferred from one card to another, during which time you’ll still need to make repayments on your ‘old’ card. Again, it’s important that you keep an eye on your statements to see exactly when the transfer goes through. If in doubt, call your bank.

5. Be date-aware. You’ll be surprised at how quickly your introductory rate comes and goes. Make sure you mark down a date in your diary a month before it expires. This will give you ample opportunity to budget for the increase in repayments, and time to attempt to move the balance to another 0% card if you so desire.

And finally,

6. Use your time wisely. Don’t waste this opportunity by taking it easy! You should be using it to pay down your debts even more aggressively than usual. It’s worth coming up with a simple repayment plan detailing exactly how much you plan to repay and where you want to be by the time that 0% offer expires.

A similar set of rules applies to the 0% introductory rate on purchases:

• Don’t spend beyond your means (in other words, if you already carry revolving credit card debt, you shouldn’t be using this card to rack up more!)
• Don’t forget about your ‘minimum repayment’ obligations
• Be punctual with your bill paying - even a single missed or late payment could wind up costing you big
• Make sure you’ve paid off all the debt on your card before that 0% purchase rate expires
• And don’t just spend haphazardly - remember that this is not ‘free money’ - you will have to pay it all back within a year’s time

Summary: A great card for balance transfers and purchases if you can play by the rules.

Apply for the Discover® More(SM) Card now.