Should we use a 0% intro rate to pay off some old credit card debt?
(I figured since they changed the terms of the offer, we didn’t have a contract unless I accepted their counter-offer. I’m just waiting for them to ding my credit somehow, without a contract. They’ll wish they’d given me more than 18 months of free credit then!) You may want to re-read the “offer.” Once you’ve applied or accepted, you are contractually obligated to the terms, whatever they maybe. “Activation” of the card is irrelevant. I would venture to guess that the offer that you received said something like “you are pre-approved,” blah, blah, blah. But in the small print the creditors based the terms on approval, which means that the final terms maybe different than the original offer. When you applied for the card, you accepted that the terms may vary. Thus, you are most likely contractually obligated. However, if you don’t use the card, there’s no reason for a “ding.” Although you probably should ensure that there isn’t an annual fee. Many people think that they have “sterling”
IIRC, most of those 0% deals are set up so that any new charges you put on are at whatever the bank’s usurious rate is. Exactly, which is why I said in the case of my that you definitely want to pay it off before the introductory 0% purchase rate expires in July to avoid paying any interest at all. Of course, the rate on this particular Discover Card offer is only like 9% (it’s variable at prime+4.5%) so it’s not terribly usurious compared to other cards. And the required purchases can be small ones, and you get a 1% rebate on them, so even if you take a few months extra to pay off the transfer, it’s not going to be too heinous. Certainly beats the kinds of offers I’ve been getting.
Does it “look bad” … on my credit report if I do a balance transfer of the entire balance of one high interest rate card to one of these 0% cards? Credit reporting by banks, and credit scoring, isn’t that sophisticated. Banks DON’T tell credit reporting agencies what interest rate they are charging (that’s competitive information), nor whether a consumer’s debt increase is due to purchases, balance transfers, or whatever (same reason). Nor do credit histories provided to interested parties show amounts owed, month by month, by card. Instead, what is shown (for a given card) is just credit granted (maximum amount), high amount (historically), and current amount owed. (What often is shown, month by month, is delinquency information, since the duration of problems is of intense concern.
