No. of Recommendations: 5
Part of attacking this debt needs to involve minimizing interest rates to maximize the actual debt reduction efforts.

Yes, that can help optimize your pay down. But the thing that will make the largest impact is to be able to consistently make more than the minimum monthly payment toward your highest rate debt. If you can decrease the rate that a lot of your debt is at, without diminishing the amount that you can put toward the high rate debt, that's useful. But if diminishing the rate that your debt is at increases the amount that you have to pay toward the low rate debt, which, in turn, decreases the amount that you can put toward the high rate debt, then it may not be as useful as it appears on the surface, and a detailed analysis, with assumptions about what you will be able to consistently pay toward paying down your debt (which kind depends on having a budget) should be done before making any moves.

The card that is almost completely paid off (9 more days) is with Citi with a limit of 27K. They are offering the 5% for 10 months of 0 APR. I found that I could open another Citi card, the Citi Simplicity which also has 5% BT fee and 0% APR, but the term is 21 months. That term would give a significant boost to debt pay down for the same "price."

Before deciding to open a new card, you should call Citi and ask if you can get the same offer on your current card. Additionally, the rates on the Simplicity card being offered online are currently 16.24% to 26.24% https://www.citicards.com/cards/credit/displayterms/flow.act... Since your current Citi card is at 17.24%, I would expect that the new card will be at least that high, and probably higher - since it's an additional extension of credit. So, you would be increasing the rate on the remaining balance by at least 3%, and possibly as much as 12% vs. keeping it on the current card. Assuming that you are going to pay minimums on the 0% rate, you will still probably have at a pretty big chunk on that card when the promo period is over. If the rate is 12% higher, it won't take very long to end up paying all the interest that you 'saved' by paying the $1000 upfront fee.

You also need to find out how the minimum payments will be figured on either offer. As already mentioned a few times in this thread, 0% offers can have higher minimum payments. What I have often seen is that minimum payments on a 0% rate can be up to 4% of the balance ($880/month on $21k - because you added the BT fee), while minimum payments on a balance that has a non-zero rate is the interest charged plus 1% of the balance. For $20k on your 14.24% card, that would be $238 in interest plus $200, or $437. That means that the minimum payment on the BT could be $443 higher than the minimum payment by keeping it on the current card, which would mean that in addition to adding $1000 to your current debt, you would be paying down the remaining high rate debt by $433 less each month, increasing the amount of high rate interest you pay.

My advice, which, as always, is worth what you paid for it, would be to forget about buckle down and work on consistently paying a set amount toward your debt pay down each month for several months. Once you've determined how much that amount is, you can actually do the detailed analysis that is necessary to see if a BT will really save you money.

AJ
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