Ok, tell me what you think!

[neatdesign]

I haven't been here in quite some time, but I hope I can get some friendly feedback from all of you about a tentative plan I have.

We have several credit card balances that we're working towards paying down, but as it will take us some time we're trying our best to at least keep the APRs reasonably low in the meantime. We recently got some offers which will help us do just that. Here's the breakdown of the accounts involved in this plan:

USAA - $15150 balance. This balance is made up of four separate promotional APR balances, with an average APR of 5.5%. About $3000 of that is currently at 0%, which will expire on August 1st, then go up to about 14% APR. The payment allocation has the lowest APR portion being paid off first, naturally -- which is great right now, but won't be so great after August 1st.

CITI #1 -- $0 balance, $2000 credit limit. We just got some balance transfer checks for 6.99% through September 1, 2008.

CITI #2 -- $1600 balance, $14,700 credit limit. We also just got some BT checks for this account, but this time for 4.99% until the BTs are paid off in full. The current $1600 balance is at 10.99% APR.

Ok, so here's what I'm thinking:

1. Use a 6.99% BT check to transfer $1600 into our checking account. With the 3% BT fee, that means CITI #1 will have a new balance of $1650 on it at 6.99% APR.
   
   
2. Turn around to pay off the $1600 balance currently on CITI #2 in full.
   
   
3. Once CITI #2 has a $0 balance, use a 4.99% BT check to transfer $13,000 (with $75 BT fee) from USAA to CITI #2. Because CITI #2 was paid off in full first, that means the entire $13,000 BT will be at 4.99% APR for the life of the balance.
   
   
4. Make $115/month payments to CITI #1 to pay off the $1650 balance (at 6.99%) before September 1, 2008.
   
   
5. Continue making more than the minimum payments on the USAA and CITI #2 accounts until they are both paid off.

So.... What do you think? I know it seems like a lot of shuffling around, but I think it will work. In the long run it will save us a lot of money.

~ Jenney

[Ima saver]

I think it is a good plan!!

[JoyJoy]

I like the plan too. 4.99% for the life of the balance is a great rate. No expiration date! No looking around for another offer.

[disneysteve]

Originally Posted by neatdesign

Continue making more than the minimum payments on the USAA and CITI #2 accounts until they are both paid off.

This is the only part I'd modify. Make just the minimum payment on the one with the lower interest rate. Put all extra money toward the one with the higher rate until that is paid off, then attack the remaining one.

One other point, which might not be a concern at this stage, but if you transfer 13K onto a card with a $14,700 limit, that puts you way high on your utilization ratio which has a negative impact on your credit score. You may not care about your score currently but I just wanted to mention that.

[neatdesign]

Originally Posted by disneysteve

This is the only part I'd modify. Make just the minimum payment on the one with the lower interest rate. Put all extra money toward the one with the higher rate until that is paid off, then attack the remaining one.

One other point, which might not be a concern at this stage, but if you transfer 13K onto a card with a $14,700 limit, that puts you way high on your utilization ratio which has a negative impact on your credit score. You may not care about your score currently but I just wanted to mention that.

Thanks, everyone, for your input, I really appreciate it. I think this was one of those things were I felt pretty confident that it was a good plan and just wanted some reassurance.

I have already gotten the process underway, first by mailing a 6.99% BT check (from Citi #1) for $1600 to my checking account. Instead of waiting for this check to post, however (which will take several days), I electronically transferred $1600 from savings to my checking account, which posted this morning. So I've started step 2 now by submitting an online $1600 payment to Citi #2 which will post tomorrow.

After that posts and brings Citi #2 to a zero balance, I'll be submitting an online BT request. Hopefully Citibank works like Capital One (my former employer), where BTs post the same day the BT is sent out, not the day the BT clears the other bank.

Finally, when the $1600 BT check shows up in my checking account, I'll be transferring that money back into my savings account.

Phew! I'm tired just thinking about it!

~ Jenney

[anonymous_saver]

You stated that you switched the $1,600 to your checking account from your savings. How much of an emergency fund do you have? With the debt that you have, if you have any more than 2-3 months worth, I would use that to pay down this debt as well.

Do you have other debt like a car loan, or a student loan?