Thread: Promotional Rates, Balances, and Rewards

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?

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.

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.