This is fascinating. I've always wondered why card issuers didn't do more to take advantage of the "pay off lower-interest balances first" rules -- though I pictured something more designed for those who regularly carried balances, like 3% on groceries, 5% on restaurants, 0% on all purchases over $1000, etc.

Has anyone ever heard of a card that charged different interest rates on different purchase categories?

$100 a month in gas
$250 Groceries


$350 a month on the card.

Put that $350 into some interest bearing account (@ 5%)

Accoring to thiscalculator you would end up with

24,368.03 in your account
21,000.00 on your card
------------------------
$3368 in interest in 5 years.

Sounds good to me, seems like others said though, you would need a pretty decent credit line to make it worthwhile.

But the 5% is taxable. CashBack isn't. I would rather have CashBack, and just get new 0% cards every year, which isnt that hard.

For those with large supermarket, gas, and/or Drugstore expenses, this deal is nothing less than smoking hot. There is no guarantee that 0% credit card offers will be as common 2-3 years in the future when this 0% offer will still be going strong. There is no guarantee that 5% rewards cards will be here in 2-3 years as well, particularly in light of the scaling back of these offers by Chase and Citi in recent months. Plus, as already has been mentioned, you can purchase gift cards to a whole variety of other retailers at supermarkets. This effectively extends 5+ years of 0% financing to many other purchase categories. I think buying Home Depot cards at supermarkets to finance cost saving energy efficient home improvements through this deal would be particularly attractive.

Supermarket chains and rite aid/walgreen drugstores also offer a bunch of giftcards to many different types of businesses and services (phone service, restaurants, best buy gift cards, home depot giftcards etc etc) you can purchase. This means you can get 0% for 5 years for much more than just gas stations, supermarkets or drugstores.

If you are afraid a place will not qualify as a gas, Drugstore or supermarket purchase for this deal it is a very simple matter of making a test purchase where you will use this card and see after your first month if you are tagged with interest.

Hot, hot, hot. No risk at all.

With CashBack:

Spend $1000, get $50 back + 5% interest on the $50 = $50+

With this deal:

Spend $1000, get 5% interest on $1000 = $50 - 25% tax = $38.50/yr for 5 years

This deal will pay off in year 2, ok I get it.

cameron2003 said:With CashBack:

Spend $1000, get $50 back + 5% interest on the $50 = $50+

With this deal:

Spend $1000, get 5% interest on $1000 = $50 - 25% tax = $38.50/yr for 5 years

This deal will pay off in year 2, ok I get it.

PS. So go back to rewards cards in year 5.

After running the numbers, this deal is worth over $8,000 in interest income to my family over 5+ years if interest rates average 5%. I'll be reallocating credit to this line over time for sure and will probably need his and her cards to maximize this deal.

EDIT: When you adjust for minimum payments, the take before taxes is probably closer to $5,000. That compares to about $3,000 I would garner if I received 5% Cash Back on my purchases. You could come out even further ahead, however, since currently you can lock in rates of 6-6.5% apy if you put a portion of your cash flow into fixed rate cds. If interest rates were to fall significantly, 5% Cash Back would become more attractive.

Is this deal only fro people applying now or also for existing cutomers.

Ok, how do you apply for this particular card? Is there some site online to read about it. I'd be interested. Thanks!