The 0% APR Experiment: Part 2

I was investigating whether it was possible to beat the credit card companies at their own game: could you take advantage of their 0% APR introductory offers offered with balance transfer credit cards to pay off all your credit card debt without paying them a penny in interest? [Read Part 1 here.]

Round 2: Discover More Card

Discover More Card

The first thing I loved about calling for the Discover More card was the automated message that told me I was being connected to Discover’s “Utah-based customer service team.” I wondered if they had bought a city in India and renamed it “Utah” just to trick everyone, but Jill the customer service rep told me she was actually in Utah.


The REAL Utah.

I told Jill that I was $10,000 in debt from a year-long ferret-hunting expedition, and wanted to roll over my debt to my new Discover More card, where I could pay it off without interest.

She confirmed I could do this, but there would be a one-time balance transfer fee of between 4-5% (or $400-$500 on a $10,000 balance). While this isn’t exactly free — it works out to the equivalent of a 8-9% APR — it’s still far cheaper than the 14% average APR across all credit cards at the time of this writing.

But that’s not all I Discovered. There’s a catch: if you’re late with a payment, you’ll pay a standard late fee of $39 — but if you’re sixty days late with a payment, your 0% APR rate is gone! Clearly they’re counting on a significant number of people forgetting to pay, which then snaps them in at the higher rate. So this won’t work for you if you’re the type that lets your credit card bills pile up underneath the laundry.

Unpaid Bills

Not for the disorganized.

I asked Jill if I could get around the balance transfer fee by doing a sneaky workaround with a friend: let’s say my friend wants to buy a $10,000 home entertainment system. I buy him the system with my new Discover More card, then he gives me cash which I use to pay off my previous card. I’ve essentially transferred over my debt to Discover, with no penalties.

Jill confirmed this “arbitrage” method would work, but she didn’t seem too thrilled about it.

“I just want to pay off my balance without having to pay interest,” I told her. “So let’s say my first year goes by, and I still haven’t paid off my balance. Can I open another Discover card, and roll over my remaining balance to that one?”

“The 0% APR would not apply to the second card,” she said tersely.

“Okay,” I said, “how about if I rolled over my balance to another company’s card, closed my Discover account, then opened a new Discover account in another year, rolling the balance back and forth between two cards until it’s paid off?”

There was a long pause. “I guess that would work,” said Jill.

Eureka! Now there was only one thing left to do: find that other card.

Please continue to Round 3: The Final Challenge!

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