Posted 8/12/2006 09:00:00 AM by Douglas

Most of the 1,200 or so credit card applications I receive on a weekly basis earn a one way trip to the shredder, but this one really caught my eye. Wow, a free computer!?! I could use that:

Sweet. Sign a few papers, get a credit card, and in six to eight weeks, this is me on my new Dell laptop:

Except I'm not a chick. Or a complete idiot when it comes to credit cards. So let's start out with the computer:

The offer is for a Dell B130 Inspiron notebook, which is currently being sold from Dell's website for $485. Let's call this the cost of the incentive. Now on to the "fine print":

Balance Transfer Information. To establish and account and be eligible for an upfront reward, you must transfer qualifying balances of at least $5,000. If your balance falls below $3,500 at any time during the first 18 months after your account is open, you will be in default and your account will be assessed a one-time fee of $600 (early pay-down fee).

Ouch. A credit card that actually penalizes you for paying off your debt. What a concept. But look at the numbers. Paying off the $1,500 in the first 18 months at 10.99% will cost $90.77 a month and $133.88 in interest. Continuing that same payment for the rest of the loan will take almost four more years, and another $837.23 in interest, bringing the total interest to $971.11. But, if you assume that anyone that would be this stupid would just make the 2% minimum payment after the first 18 months, the total interest charge would be $1,335. For a bottom-end laptop that's not even worth $500.

Ok, so you're in debt anyway. If you're going to be paying credit card interest, you might as well get something for it, right? Only if you've resigned yourself to be in debt for the rest of your life. Instead of falling for stupid gimmicks, how about focusing on not paying a "stupid tax" to the bank for the use of their money. There's no such thing as a free lunch.