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Interest-free debt for life?
"Zero-percent for life" on transferred credit card balances now being offered. But it can cost you.
July 1, 2003: 6:01 PM EDT
By Jeanne Sahadi, CNN/Money.com Senior Staff Writer

NEW YORK (CNN/Money) Zero percent offers on credit card transfers have been around a while. But they usually expire within six months or a year.

Now there's an even more enticing deal available.

HOW LOW CAN THEY GO?
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Interest rates for lifetime balance-transfer deals range from 0% to 9.9%.

Source: Mintel's Comperemedia

Two credit card lenders -- Morgan Stanley's Discover unit and J.P. Morgan Chase -- are offering "zero percent for life" deals to some customers who transfer balances from other cards.

Lifetime deals are not new -- about 10 percent of credit card lenders offer them, according to Mintel's Comperemedia, which regularly surveys consumers' direct mail solicitations. But typically they offer very low rates for transferred balances, not zero-percent.

By "life," mind you, they don't mean your lifetime. They mean the life of your balance. And there may be a window of time for which that offer is good. With Discover, for instance, you may get six months (or less -- it varies per customer) to transfer as many balances to the card as you like.

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"If you're a savvy consumer you can play the game and make it work for you," said Curtis Arnold, spokesman for CardRatings.com, a grassroots organization devoted to educating consumers about credit cards.

There are some catches, however. Here are a few to keep in mind if you're offered a lifetime deal.

Catch No. 1: If you're late with your payments, it'll probably cost you.

With Discover, for instance, if you're late on one payment, Discover will cancel your zero-percent deal and charge you the standard purchase annual percentage rate -- currently 13.99 percent on the "zero percent" deal -- said company spokeswoman Beth Metzler. If you're late twice, that APR defaults to 19.99 percent.

With Chase, if a payment is late, the "preferred pricing rate" which ranges from 10.24 percent to 19.24 percent -- will take effect, according to Susan Wolfe, director of research for Comperemedia.

Catch No. 2: The zero-percent rate will only apply to your transferred balance, not to new purchases.

Some lenders may require that you make at least one or two new purchases a month on your card, Cardratings' Arnold said. And those charges are likely to be subject to normal or high APRs. (The average APR, according to the latest survey from CardWeb.com, is 14.94 percent.)

Discover customers, for instance, will have to make two purchases a month to maintain their "zero percent" deal, though there is no minimum for those purchases.

Catch No. 3: Monthly payments will be first applied to transferred balances. That means you'll be paying interest on new purchases from the get-go unless your monthly payment is large enough to cover your total transferred balance and the cost of your latest purchases.

But a lifetime deal can still be a cost-effective way to pay off debt if you limit your new purchases to very low-cost items and manage to pay off your balance in relatively short order.

How can I get in on this deal?

Each lifetime offer is unique. That's why Arnold cautions consumers to read the fine print and figure out if they can meet the requirements without incurring further needless debt.

Tools to cut debt and manage your finances

If you're all ready to call your credit card lender and sign yourself up, keep in mind these types of deals may not be available to you. At Discover, for instance, select customers are being offered the "zero percent for life" deal via direct mail and telemarketing, Metzler said.

That's not to say you can't call to see if you can get a zero-percent introductory offer. But the lender will decide who qualifies and who doesn't for the lifetime deal.  Top of page




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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.