Are 0% Balance Transfer Credit Cards for Life Possible?

by David Ning · 24 comments

While researching on 0% balance transfer credit cards the other day, I accidentally found out that many people actually search for 0% balance transfer for life credit cards. My first reaction was “come on, really? There’s no way anyone in the right mind would offer this.”

But the curious side of me took over and decided to take a look. Sure enough, Chase offered select customers 0% balance transfer for life in 2003. It came with rules though. You must pay the minimum balance every single month, and you must make a minimum of two purchases every billing cycle. Failure to do so and your rate will rocket back up to normal levels.

But Wait, There’s More.

If that’s not enough, there’s more. Not only are new purchases mandatory, they aren’t included in the 0% interest rate deal. And to add insult to injury, any payments you make first goes to the balance transfer amount. Result? A guarantee plan to pay high interest without really knowing.

A Friend’s Take on These 0% Balance Transfer Credit Cards for Life

I told my friend about this, and he seemed to have quite an opinion on the topic. Best of all, he generously offered to write up a short piece about his view. I encourage you to read what he has to say about the idea of these 0% balance transfer for life offers.

Since many of the perks for creditors don’t actually involve charging you interest on that debt you transfer, it is theoretically possible that we will see 0% balance transfer credit cards for life. If creditors believe that they can entice customers to transfer their balances and then become moneymaking customers, creditors may resort to offering this seemingly generous promotional rate in order to attract a customer.

Generally, their motivation would be to get you to switch to them by transferring a balance, and then either use the card for a purchase or default on some term. This way, they could win by getting a new customer with this great promotional rate, and still end up making money off of you in the long run. Either way, they will make money because if a 0% balance transfer for life offer existed, they’d surely charge a fee to transfer that balance.

Of course, the idea of a 0% balance transfer for life card is far off in the distance now, given everything we’ve been through. In the credit-crunch that exists in late 2009, going into 2010, even regular 0% balance transfer promotional offers seem to have dried up. Gone are the days when balance transfer offers came with fees capped at $100, or 12-month terms. These days, even people with perfect credit usually can only qualify for a six-month balance transfer offer, and then must pay an uncapped 3% fee for the privilege.

Furthermore, new credit card laws going into effect in 2010 may forever put an end to the idea of a 0% balance transfer for life offer. These new laws mandate that payments must be applied to higher interest rate balances first, potentially eliminating one major source of money for creditors: the purchases made on a balance transfer card. Other consumer protections, such as longer grace periods for late payments and limited interest rate hikes, may also make it less advantageous for creditors to offer promotional rates to consumers. When this law goes into effect, that may be the death of any 0% balance transfer offer, let alone one for life.

If you are one of those thousands of people searching for 0% balance transfer for life offers, it’s probably better to take some time to make more money instead.

The age old advice will always hold true – When something is too good to be true, it probably is. But I’m curious now. Were you offered these back in 2003? If you did, are the terms still the same? And for those that never got the chance to accept, would you do so if you are offered that chase credit card I mentioned?

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{ read the comments below or add one }

  • Kevin says:

    I did this back in 2007. When I inquired, I asked if there was a minimum on the purchase and they said NO. I knew exactly what I was going to do. I made 2 separate purchases at 2 different gas stations every month for $.01; yes 1 cent worth of fuel !!!! I did that for almost 4 years while enjoying 0% on a 10g transfer. When it was all said and done; transfer fees included, Discover Card loaned me 10g for over 4 years to the grand total of $10,427.68 !!!!!
    Reply

  • Louis says:

    Wouldn’t any payment amount in excess of the minimum payment get credited to the higher (purchase) interest rate? So, if I made two charges for a total of $40 in a month, couldn’t I simply pay the 2% minimum plus $40 and remain interest free?

  • 0% Apr says:

    I’ve never seen 0% APR for life. It’s a promotional offer they use to get new customers. But as you said, it could work as a long-term way to increase usage. Another thing I can’t figure out is why anyone would need such a card. Unless you use other cards with rewards and high APR and then transfer the balances to the 0 APR card. I guess there are always ways to game the cards.

  • Lanette says:

    I got an offer through Discover a few years back with 0% interest on Balance Transfers for the life of the loan….as long as I make 2 purchases by the end of the billing cycle. If you are smart about it, you make 2 purchases of .69cent candy bars at Target and there is your 2 purchases. Ive been doing it for a few years and my interest for the entire year to date each year hasnt even hit $5. If you play your cards right, it ends up being a REALLY good offer.

    • Kevin says:

      I did the same thing, EXCEPT I made 2 separate purchases at 2 different gas stations every month for $.01; yes 1 cent worth of fuel !!!! I did that for almost 4 years while enjoying 0% on a 10g transfer. When it was all said and done; transfer fees included, Discover Card loaned me 10g for over 4 years to the grand total of $10,427.68 !!!!!

  • 0% balance transfer says:

    apply for 0% balance transfer offers only if you use your card responsibly, i.e. you make payments on time. For many, 0% interest credit card serves as an excuse not to make payments on time. By doing this, you will only keep accumulating your debt, which would eventually be very difficult to repay. However, if you do so, the interest rates will increase even before the introductory offer ends. Hence, if you can’t make full payments, at least make sure you make monthly minimum payment. Such cards and offers must be used to eliminate your existing debt quickly, and save some money every month.

  • Randy Gallimore says:

    Well i actually have a credit card that gave me 0% on balance transfer’s for the life of the card back in 2007 and i took it and actually had it.

  • Credit Balance Transfer says:

    You have to be so careful reading the small print…

    Recently I’ve noticed lenders actually hiking their standard APR rate for balances transferred and not paid off in full during the introductory period. So whereas you’d normally transfer $1000 at 0% APR for 6 months and then go onto standard rate of say 16% APR – now you may well find your original balance transfer being charged at around 18% APR following the intro period until fully paid off.

  • Card says:

    Chase sounds really tricky with making people do a minimum of two transactions a month while they probably have a huge balance on the card.

  • debtmaven says:

    I signed up for 2 0% transfer cards in the past year. In January/Febuary I was approved for a 5K Discover card, with a $100 transfer cap (3% up to that amount). Later in the year, in May/June, I was approved for a US Bank card for 10K. They didn’t tell me, but there was a $100 cap on that as well. Yes, I have excellent credit, and yes, I’m in debt. I started with 45K and I’m now down to 37K.

    I expect it will get harder to find a 0% card when the offer expires (they are both a year at 0%). They’re probably banking on me sticking with them, and to be honest, I might need to (due to an SBA loan maturing summer next year and no where else to put the money).

    I certainly hope that the economic situation improves by May next year so that I can try getting some more 0% transfer rate cards. And FYI, I am NOT racking up new debt, I’ve committed to paying off what I owe, it will just take a few years.

    Thanks for the article – I always see the 5% cashback on Discover for their quarterly categories, but I alway decline in using it. I don’t want to get charged more than 5% in interest since it will be some time before I pay off the 0% portion first.

    • Thirtysomething Finance says:

      Nice work. Are these 0% for life cards, or are they limited to a certain length of time? Do you have to do anything to keep the 0% alive (a la 2 purchases per month)? If so, how do you manage it? Love the 0% card.

  • Joseph says:

    I know a number of people who survive by transfering balances from card to card. I some of them have claimed that they have ended up saving more than they would have paid on interests.
    It’s a game that you you have to be very precise to win but most of the time, the big companies win.
    I recomend transfer if you are planning to pay the card off without charging it and so save on interest and hope by the time 0% expire you eill have paid it off.

    good luck
    Joe

  • Joe Morgan says:

    This is just a bad deal.

    I have used 0% transfer offers in the past, but I made sure that I didn’t have to make any new purchases and that I paid the balance off before the rate reset. It was great for that. I used it to stop the clock on my interest while I paid off the balance and didn’t use credit cards for the entire time I did it.

    I’d take a pass on this one though. My wife recently got a 0.99% transfer offer that had reasonable terms. I’d take that or even a 2.99% over this 0% for life garbage offer.

  • Thirtysomething Finance says:

    I currently hold a “0% balance transfer for life” credit card from Discover. I opened this account in August 2008, and it offered 0% on balance transfers for 6-12 months or so, with a fee of 3% of the balance transferred and a minimum monthly payment of 2% of the outstanding balance. Per the terms of the agreement, if I make two purchases per month, I can extend the 0% interest period indefinitely. So I set up a PayPal subscription to make 2 monthly payments of $0.01 each with my Discover card.

    In a nutshell, I basically took out an interest-free loan for a one-time payment of 3% of the balance, and I pay 2% of the outstanding balance each month. That said, it took some careful analysis to make sure this would work and to set it up, and if I fail to make 2 purchases each month or fail to make my minimum monthly payment when due, I have to repay the outstanding balance.

    In addition, Discover recently tried to change the terms such that the minimum monthly payment on any balance that includes a balance transfer would be 2% of the balance, plus a $40 towards the outstanding balance. This wouldn’t be the worst thing in the world, but given that I’m not paying any interest on this loan, I didn’t want to pay it off any sooner than necessary. However, this was a term I could opt out of, so I did. So far (15 months later), so good.

    • Daniel says:

      Very smart with the paypal transactions. How much was the transfer? 3% doesn’t seem like that much in order to pay 0% interest for a few years until you pay it off.

      If you pay 2% of the balance…does that mean you will never pay off the balance? Or at some point will you do this again with a big purchase?

      • Thirtysomething Finance says:

        Thanks, Daniel, and I think that’s right. It’s like walking half way across the room, then walking half way across again, then again — you never get all the way across. I haven’t reviewed the fine print lately, so there may be a point when I’m required to make a balloon payment; regardless, I will likely just pay the balance in full at some point in the future when I’ve paid down my other, higher interest-bearing debt and/or when I want to re-allocate a monthly payment from my budget.

        Funny — I’m working on starting a blog and was actually going to post about this very topic.

    • MoneyNing says:

      So I guess the 0% balance transfer for life really do exists and the paypal transactions are genius.

      Next time they offer something like this, I may just have to try it. The way you have it setup, it can almost qualify for passive income.

    • Rick Vaughn says:

      Interesting move with the paypal payments. Looks like they were quick to close that loophole. I will definitely look into the Discover Card. Does Chase not offer this kind of deal anymore?

  • CreditShout says:

    Honestly the best card you’re going to find right now for balance transfers assuming you don’t want to deal with all of those hidden fees is the Discover More American Flag Card, which just started offering 0% APR for 12 months. To take advantage of it though you need to make sure to get the American Flag version and not just the regular More Card.

    The difference is that with the standard More card there is a 3% initial transfer fee, but the American Flag version has a 5% initial transfer fee however you get an extra 6 months without interest so for most people it’s worth it.

    • I tend to agree with you although I never could understand why Discover chose to market the Discover More cards as separate cards when really they are all exactly the same but just with different card designs (withe the exception of the balance transfer differences for the American Flag card that you mentioned).

  • Michael James says:

    That’s an amusing variant of the 0% transfer. I can see a lot of people being taken in by it. When your friend says “new laws mandate that payments must be applied to lower interest rate balances first”, should that be “higher interest rate”?

  • Daniel says:

    So if I did a balance transfer of $5,000 and then made two $20 purchases…I’d get charged a fee if I didn’t pay off the $5,040 by the end of the month? That’s ridiculous. I’d rather take a 6 month or 1 year offer and not have to worry about these other shenanigans. If you need more time than that, you shouldn’t be buying. A true 0% for life offer sounds unreal, however. That would be a true miracle.

    • MoneyNing says:

      While it’s not technically called a fee, you will pay an interest charge since you cannot just pay the $40 each month and leave the balance transfer alone.

      Now that I think about it, I’m sure those people who signed up would’ve been pissed by now even if the terms haven’t changed and they’d be out of the card after so many years.

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