I agree with Dave, close the card. Discover knows what it is doing obviously and this change is only in their favor. I just hope Citi doesn't decide to do this on my BT4Life.

So it seems the best option is to suck it up and pay the 4%?

ILikeDollars said:Good luck continuing to make the required monthly purchases once the account is closed.

@^%$#^$@ didn't think of that!!

Crap... I guess the people working there are always smarter than me.

Quoted from the Summary of Changes:

"If you choose not to accept these changes, we will close your Account and you must pay your balance under the current terms of your Agreement"

I crunched the numbers to see exactly how much in interest I would end up paying in the end should I go ahead and charge a new 10% of my current balance at my standard card rate of 9.99% APR, and here are the shocking results:

My balance, in October when the changes take effect, will be $3211. A new 10% charge would equal roughly $320. At a minimum payment due of 2%, it will take me 145 months to completely pay it off. However, in that same period, I would accrue about $737 in interest on that original $320.

Instead, should my minimum payments change to 4%, it would take me 89 months to pay off the $3211, so I loose 4.5 years of free money by this policy change. I'm not about to hand Discover a dime in interest though, so I guess I will just suck it up and pay the 4% minimum now.

Of course, I would assume that my scenario is one of the better ones among us FW'ers: A small balance and low interest rate. I would hate to run the numbers for those of you whom have upwards of 20% standard APR and >10,000 balance...

May the Force be With You All...

What I have been wondering is, can you force them to allow you to opt out without closing the account? The argument is: You set up the deal in such a way that the account has to be open in order for the deal to work. Now you come along and impose a unilateral change, and you say I can reject the change and pay off the balance under the original terms. But according to the way YOU set up the deal, closing the account makes it impossible to pay off the balance under the original terms. I am therefore entitled to reject the change without you closing the account, or alternatively to reject the change and have you remove the purchase requirement.

I can see how the change makes the BT4life not as good of a deal, but isn't it still a pretty great deal?

If you borrow $10,000, now you have to pay 4%/month rather than 2%/month. So after 12 months, you'll have a little over $6100 at 0%, instead of the $7800 you would have for 2%/month payments. You end up paying back an additional 17% of the initial BT amount in the first year. Still, you have 61% of the money still at 0%.

Compare that to the standard 12 month BT and you're still quite a ways ahead.

Not that I'm happy to see Discover downgrade the BT4life deal, but I wouldn't cancel my account over it, as it's still a good deal. At least it doesn't knock out the potential profit from BT's as much as the uncapped 3% BT fees that are becoming all too common.

I almost have to admire Discover for their cunning here. This change won't even be noticed by the people who are using their BT4life the way Discover wants them to (carrying large purchase amounts subject to interest), and only hits those trying to maximize their profits off the deal by spending a few pennies per month to keep their rate.

Plus, this change doesn't ruin the arbitrage potential, it only reduces it. Their BT4life will continue to attract FW types, because it will be better than 12 month deals, especially if they leave the cap on their BT fees.

OP, Firstly, thanks for alerting all of us here on FWF!

After numerous attempts to induce us into purchasing something of worth, (e.g. Credit protector, identity theft, wallet protector, 10$ CashBack bonus)this is definitely a smart move on the part of Discover - hope one of us manages to convince them that the alternate-offer of closing the account is not truly an "alternate" offer.

For now, i'm planning to milk them even if it looks like its going to end sooner ...

ProfessorEd said:One of you affected should talk to a good class action lawyer.

I would argue they are changing the terms of a contract without your permission. They are putting you in a position where rejecting the terms prevents you from continuing to make purchase. They should continue to let you make a small purchases.

Well usually they can change the terms pretty much any time they want assuming they give you enough advance notice. If change is due in effect in September, notifying people now gives plenty of notice. You can continue using them with the new terms or close your account. They have a clause that if you do nothing, you accept the terms of the new contract.

Now if they changed the APR on the balance transfers, yeah they'd probably be in trouble considering those are supposed to be fixed forever but it's still 0%. Look in the terms if there is something saying they guaranteed to not touch the minimum payment. I bet they went over it with a very fine comb here to find a way to cut on what was costing them a bundle.

Shandril said:Well usually they can change the terms pretty much any time they want assuming they give you enough advance notice. If change is due in effect in September, notifying people now gives plenty of notice. You can continue using them with the new terms or close your account. They have a clause that if you do nothing, you accept the terms of the new contract.

Now if they changed the APR on the balance transfers, yeah they'd probably be in trouble considering those are supposed to be fixed forever but it's still 0%. Look in the terms if there is something saying they guaranteed to not touch the minimum payment. I bet they went over it with a very fine comb here to find a way to cut on what was costing them a bundle.

I don't agree that they can change the terms any time they want, there must be some provision requiring them to give the the chance to opt out. There is probably some federal statute. So, my argument is that they are not truly giving you the chance to opt out, as required by whatever the applicable statute is. Opting out is supposed to allow you to keep the old terms, but canceling the account prevents you from keeping the old terms.

It's clear that they are changing a provision that is provided for in the contract, because they give you a chance to opt out, if it wasn't in the contract, why would they mention the opt out provision? APR, minimum payment, grace period, fees, those are all terms, and they're changing a term without giving you a true opportunity to opt out.

That's my argument; I think whether it flies or not depends on the wording of a specific federal statute.