Promotional Rates, Balances, and Rewards

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Promotional Rates, Balances, and Rewards

Postby sdoonan » Tue Dec 06, 2011 10:41 pm

Allow me to set up this story real fast:

I have a Discover More card with a 1K credit limit and a normal APR of 17.99%. I inquired about a possible APR reduction in August and was offered 1.9% for 6 months, which I took.

I keep hearing around here that one shouldn't carry a balance with a rewards card. Does this "rule" still apply if one has a promotional rate, especially the one I got?
Cards I Carry:

Visa: CitiForward Student (1k CL, 15.24%), Capital One Student Journey Rewards (.5k CL, 19.8%)
Discover: More Student (1k CL, 17.99% regular, current rate 1.9% through 3/6/12) (Primary card at this time)
AMEX: Blue Cash Everyday (2k CL, 21.25%)

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Postby jeffysdad » Tue Dec 06, 2011 11:42 pm

If you must carry a balance, you should do it on whatever card offers you the lowest ultimate interest. If that happens to be a rewards card with a promotional rate, that's fine. Just remember to adhere to the rules of the promotion and pay off the balance before it ends. It seems the majority of cards out there now offer some form of rewards.

If you are card surfing for promotional rates, a balance transfer to a new account, i.e., one that offers you a promotional rate in order to get your business, will likely be a better deal (lower/no interest, longer promotion term).

I used to carry around a large balance and re-home it every 6-9 months to a new card with a 0% promotional rate, paying only the 2-3% balance transfer rate each time. That got old so I paid off the debt.
American Express: Blue Cash Preferred (groceries, 6%; gas, department store, 3%); Gold Delta SkyMiles (Delta Air Lines, 2 miles/dollar, free checked bag).
US Bank: Cash+ (utilities, phone, internet, restaurant, 5%; drugstores, 2%).
FIA Card Services: Fidelity Amex (everything, 2%); Fidelity Visa (everything, 1.5%).
Chase: Freedom (rotating, 5%); Amazon (, 3%); PriorityClub (IHG hotels, 5 points/dollar); Sapphire (not in use).

*All cards are registered with PriorityClub IDine program for 8 points/dollar at participating restaurants.

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Postby FutureBillionaire » Wed Dec 07, 2011 8:11 pm

I have one card that I carry a balance on, and it's because I get a partial refund yearly from the bank. I don't recommend carrying a balance on a rewards card unless that is the only card you use. You are negating the impact of the rewards if you are giving money back to the issuer in the form of interest payments.
Gas: Discover It, Penfed Platinum Rewards x2, Chase freedom, Citi TYP
Plane tickets: CSP
Groceries: AMEX BCP, Penfed Platinum Rewards,Citi TYP
Clothes: Express, Amex BCP, Discover IT
Amazon: Citi Forward, Cash +
Restaurants: Citi Forward, Chase Freedom, Discover IT, CSP
Hotels and other travel: Discover Escape, CSP
Movies: BofA travel rewards visa signature(fandango), Discover IT, Citi Forward, Freedom
Bars, clubs, tomfoolery: CSP, Citi Forward, Discover IT, Freedom
Balance transfers: Kroger 123 rewards
Bill Pay: Chase Ink Plus, Citi Forward
Everyday spending: Bofa Accelerated cash rewards amex, Discover Escape

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