How's this for a plan?

[neatdesign]

A couple of you might remember me, although I haven't posted on here for ages. Nice to be back. We have been working hard to pay down our credit card debit: It was up around $28k a year ago, and now it's down to about $19k, so slowly but surely...

My question isn't unique but I'd still appreciate the feedback. I have a pretty decent BT offer but using it would mean dipping into savings first. Please let me know what you think:

Important details:

• Current savings: $4000
• Citi Card w/ BT offer: $1340 current balance (scheduled to be paid off by June 2009) with $5000 credit limit
• BT Offer: 2.99% until April 2010 with 3% BT fee
• Bank of America Card: $6800 current balance @ 7.99 APR, couldn't BT all of it but most of it

My idea:

• Dip into savings and pay off $1340 Citi balance, bringing balance to zero
• New Savings balance: $2660
• Transfer $4660 from BOA to Citi
• New Citi Card balance: $4800 (includes 3% BT fee)
• Citi payment plan: $326/month to pay off by April 2010
• New BOA Card balance: $2140
• BOA payment plan: $112/month to pay off by November 2010

My biggest concern is taking away from our savings. It's taken us a long time to save up to $4000, and that's still not a lot in terms of being an emergency fund. However, the only way to make this BT worth doing is bringing the Citi balance to zero before doing the BT. The $1340 Citi balance is at 4.99 APR, which itself is a limited BT introductory rate which ends in July, then goes up to about 14.99 APR. If I do the 2.99 APR transfer now, that 4.99 APR (later 14.99 APR) balance will take forever to pay off -- which is why I'd have to pay the $1340 off first.

So the con is that we'd have to lose some savings to save money in the long run. The pros are that we end up paying less interest on both accounts, plus we'd have a pay-off deadline for the BOA card (which we don't currently have).

What do you think?

~ Jenney

[jIM_Ohio]

I'd keep all debt on one card.

Use the 4k savings and pay down the balance with highest rate
then pay off rest of loan with money allocated to debt paydown.

You did not list the base plan (what would payoffs be if you did nothing? Current minimums and interest rates needed.

[neatdesign]

I'd keep all debt on one card.

Unfortunately, these are not the only credit cards on which we have debt, so we're beyond that point now. As I mentioned in my OP, we have around $19k in credit card debt, so this is just a part of that.

Use the 4k savings and pay down the balance with highest rate
then pay off rest of loan with money allocated to debt paydown.

Considering the economic times we're in, wiping out all of our savings to put towards credit card debt isn't a smart move, in my opinion -- particularly since we'd still have thousands of dollars in debt still left to pay off. However, having the lowest APRs available is an acceptable substitute. I'm just worried that putting 34% of our savings into BT plan is too high.

You did not list the base plan (what would payoffs be if you did nothing? Current minimums and interest rates needed.

Currently the combined monthly payment of our BOA and Citi cards is about $476/month. I'm not sure what the current minimums are because we pay fixed amounts each week ($55/Citi and $50/BOA) which is more than the minimums would be anyway. The payment schedule I listed above is essentially a redistribution of those payments, to ensure that the Citi BT would be paid off by April 2010.

The current APRs are included in my OP.

~ Jenney