cc transfer - what do you think?

[jodi]

I get very few offers because I opted out, but I did receive one today from Discover (who I already have a card with). It caught my eye. Here's the details:
0% APR through 11/07 on balance transfers, 0% rate will continue for the life of the transfer providing that I make two purchases per billing cycle.
3% balance transfer fee ($5 min., $50 max).

I am seriously considering transferring my student loans ($5700 at 4.6%) and possibly even DH's student loans ($15k at 4.75%). If I am figuring this right, I would save over $200 per year (after deducting the balance transfer fee) on my loan, and $700 on Dh's. I could set up two automatic charges to be made on the account so that I always had two purchases. I am very good about making my payments on time. Am I missing any potential pitfalls here?

Oh wait, just thought of one - I would lose the student loan interest deduction on my taxes. I wonder if I would save enough in interest to make this worth the time and hassle. Anyone else do this? Did you have good or bad experiences?

[jodi]

oh, I just checked my taxes. I paid $279 in student loan interest last year (DH's were in deferment). TurboTax tells me that every $1 in deductions saved me $.11 in taxes, so I guess I only saved about $30 out of the $279 I paid. This makes the above proposition look a little more profitable, especially now that we are paying on DH's loans. I hate the idea of being tied to a credit card for the next 5+ years, but I hate even more the idea of paying thousands in interest to Sallie Mae. Hmmm...

[Scanner]

Would you need a cash advance to pay the student loans off? Sometimes there's a cash advance exception.

Also, you understand what happens is yes, those balances are at 0% but with the purchases you make per month (minimum purchase?), they get added into your balance at 21% and that interest accrues while your normal payments go towards the low interest balance transfer.

In a nutshell, I wouldn't do it. 4.5% isn't a bad interest rate at all and don't mess around with the term with refinancing. Student loans are usually ten years and you've paid down X years so far - now you are past the tough part of the amortization and paying down principal.

If you refi. you are back to the typical screwball amortization schedule where your first payment is 95% interest and 5% principal.

[jodi]

Aha - I knew i could count on somehere here to find the flaw. I didn't realize that the subsequent charges were paid last - I thought they were paid first. I knew there was a reason the ask here!
Scanner to the rescue - again!