It the minimum payment is 1.5%, than quickly rerunning with the new minimum payment yields yields the data attached below. This is much more attractive now, but note that you do need large credit lines to make this work, especially if you spend $600/month. On the other hand, you do need to consider whether this will create problems with 0% offers. I still think getting this card is not a bad idea since it will work as a pretty good insurance poly, and worst case it can always be converted or combined later if you need to get a different Citi card.

Interest Rate: 5%
Tax Rate: 5%
Monthly Purchases: $300
Max CC Balance: $11022.61
Cash Back with card: $1969.73
Cash Back without card: $1103.52
Difference: $866.21


Interest Rate: 5%
Tax Rate: 5%
Monthly Purchases: $600
Max CC Balance: $22045.22
Cash Back with card: $3939.46
Cash Back without card: $2215.73
Difference: $1723.73


Interest Rate: 7%
Tax Rate: 5%
Monthly Purchases: $300
Max CC Balance: $11022.61
Cash Back with card: $2865.77
Cash Back without card: $1161.49
Difference: $1704.28


Interest Rate: 7%
Tax Rate: 5%
Monthly Purchases: $600
Max CC Balance: $22045.22
Cash Back with card: $5731.54
Cash Back without card: $2335.83
Difference: $3395.70


Interest Rate: 5%
Tax Rate: 10%
Monthly Purchases: $300
Max CC Balance: $11022.61
Cash Back with card: $1866.85
Cash Back without card: $1096.76
Difference: $770.09


Interest Rate: 5%
Tax Rate: 10%
Monthly Purchases: $600
Max CC Balance: $22045.22
Cash Back with card: $3733.70
Cash Back without card: $2201.74
Difference: $1531.95


Interest Rate: 7%
Tax Rate: 10%
Monthly Purchases: $300
Max CC Balance: $11022.61
Cash Back with card: $2715.73
Cash Back without card: $1151.68
Difference: $1564.05


Interest Rate: 7%
Tax Rate: 10%
Monthly Purchases: $600
Max CC Balance: $22045.22
Cash Back with card: $5431.46
Cash Back without card: $2315.53
Difference: $3115.93


Interest Rate: 5%
Tax Rate: 25%
Monthly Purchases: $300
Max CC Balance: $11022.61
Cash Back with card: $1558.21
Cash Back without card: $1076.46
Difference: $481.74


Interest Rate: 5%
Tax Rate: 25%
Monthly Purchases: $600
Max CC Balance: $22045.22
Cash Back with card: $3116.41
Cash Back without card: $2159.79
Difference: $956.63


Interest Rate: 7%
Tax Rate: 25%
Monthly Purchases: $300
Max CC Balance: $11022.61
Cash Back with card: $2265.61
Cash Back without card: $1122.23
Difference: $1143.38


Interest Rate: 7%
Tax Rate: 25%
Monthly Purchases: $600
Max CC Balance: $22045.22
Cash Back with card: $4531.21
Cash Back without card: $2254.61
Difference: $2276.61


Interest Rate: 5%
Tax Rate: 35%
Monthly Purchases: $300
Max CC Balance: $11022.61
Cash Back with card: $1352.45
Cash Back without card: $1062.93
Difference: $289.51


Interest Rate: 5%
Tax Rate: 35%
Monthly Purchases: $600
Max CC Balance: $22045.22
Cash Back with card: $2704.89
Cash Back without card: $2131.81
Difference: $573.08


Interest Rate: 7%
Tax Rate: 35%
Monthly Purchases: $300
Max CC Balance: $11022.61
Cash Back with card: $1965.53
Cash Back without card: $1102.60
Difference: $862.93


Interest Rate: 7%
Tax Rate: 35%
Monthly Purchases: $600
Max CC Balance: $22045.22
Cash Back with card: $3931.05
Cash Back without card: $2213.99
Difference: $1717.06

Worth a shot to ask them to apply this offer to my Diamond Card now?

You guys are great.

Robyn

don't like it guys.
if i spend $1,000 on my 5% rewards card i get an almost instant tax-free $50. however, if i spend $1,000 on this card and carry the balance, i put $1,000 on the bank and get 50 taxable bucks a year from now. in addition, i have to make minimum payments on that $1000. time value of money...
this is good only if you strongly believe that 5% Cash Back will disappear soon and/or the deposit rates will increase steadily and/or you are cash strapped. and about the $300 limit, i have a bunch of cards so no worries here.
therefore, i won't bite.

cameron2003 said:
Good point, I wonder if our financial analyst (dblevitan) took into account the interest people would earn if they kept their minimum payments in the bank?

I don't think I understand what you mean. The only reason we're making minimum payments here is because the money is being held at 0%. The minimum payments have to come from somewhere. I suppose you could pay them from current income, but you may as well deposit that money into a savings account and pay from the savings account. I don't really see the big deal. And with the rewards cards, you have to pay it back every month in full or you're going to pay lots of interest. Let me know exactly what you want me to take into consideration and I'll try to figure out how to include, but right now I don't understand.

dblevitan said:cameron2003 said:
Good point, I wonder if our financial analyst (dblevitan) took into account the interest people would earn if they kept their minimum payments in the bank?

I don't think I understand what you mean. The only reason we're making minimum payments here is because the money is being held at 0%. The minimum payments have to come from somewhere. I suppose you could pay them from current income, but you may as well deposit that money into a savings account and pay from the savings account. I don't really see the big deal. And with the rewards cards, you have to pay it back every month in full or you're going to pay lots of interest. Let me know exactly what you want me to take into consideration and I'll try to figure out how to include, but right now I don't understand.

Oh forget it, I think I had a brain cramp. I think your numbers are right, far as I can tell. One last idea though: If we indeed can only have so much credit card debt at any one time, it makes more sense to have the debt on a card that we dont have to give up rewards on. If you believe the debt we can have is pretty much limitless, then it doesnt matter.

amerifat said:don't like it guys.
if i spend $1,000 on my 5% rewards card i get an almost instant tax-free $50. however, if i spend $1,000 on this card and carry the balance, i put $1,000 on the bank and get 50 taxable bucks a year from now. in addition, i have to make minimum payments on that $1000. time value of money...
this is good only if you strongly believe that 5% Cash Back will disappear soon and/or the deposit rates will increase steadily and/or you are cash strapped

You're forgeting year after year of 0% interest in your analysis, adjusted for minimum payments. Speaking of cash strapped, this is a great tool for allowing you to fund your Roth IRA's for the duration of this offer if you couldn't afford to otherwise. When the promo ends, at the minimum you will have built up some tax free earnings if you are still cash strapped and have pay off your card with your Roth contributions.

If you fit the right profile, this deal is golden. I should do well with this offer since I have: high fixed everyday expenses, a low tax rate, and an interest in rate gaming/hunting.

Dave you are correct. I changed a few more things and it made this offer seem worse.

However, this was not factoring in the opportunity cost of investing the money from the 0% BT upfront. This would obviously add to the card's appeal, but then again, there are a number of other cards with the -% BT. I was trying to find out if it would be worth using for all my gas/groceries as a substitute for my current citi 5% card. I'll try to post my spreadsheet later where people can specify things like:
- credit line used for BT
- monthly spending
- tax bracket

One interesting thing is that spending $500 a month in purchases left me with a total balance of ~$14k at the end of the promotion. After a while the 3% a month starts to hamper the growing balance.... obviously. a Tradtional BT is better because you can immediately put the credit line to use.

Basically it takes one year to get a 5% return on your money with this card (and this is 100% taxes), but this doesn't grow that fast because of the 3% min payment (if thats what it really is). The current citi 5% card gives you this 5% instantly tax free (and only the interest earned on this money is taxed).

slimcustomer said:amerifat said:don't like it guys.
if i spend $1,000 on my 5% rewards card i get an almost instant tax-free $50. however, if i spend $1,000 on this card and carry the balance, i put $1,000 on the bank and get 50 taxable bucks a year from now. in addition, i have to make minimum payments on that $1000. time value of money...
this is good only if you strongly believe that 5% Cash Back will disappear soon and/or the deposit rates will increase steadily and/or you are cash strapped

You're forgeting year after year of 0% interest in your analysis, adjusted for minimum payments. Speaking of cash strapped, this is a great tool for allowing you to fund your Roth IRA's for the duration of this offer if you couldn't afford to otherwise. When the promo ends, at the minimum you will have built up some tax free earnings if you are still cash strapped and have pay off your card with your Roth contributions.

If you fit the right profile, this deal is golden. I should do well with this offer since I have: high fixed everyday expenses, a low tax rate, and an interest in rate gaming/hunting.


i realized that i assumed a year only at 0% and wanted to edit my post but then i got lazy. anyway, you need a healthy credit limit on this one.
do you realize that some people will overeat, overmedicate and overdrive just for the sake of this 0%?
"honey, but we have 0% for 5 yrs on this one, buy more pepsi, chips and mylanta! now we can buy an suv, gas is FREE* for 5 yrs!"


*not free

excel spreadsheet

theres an excel sheet that should end all the problems with this.
you can enter the amount of gas and the amount of groceries you purchase in a month and enter the expected interest rate for each year for 5 years and change them accordingly. I also included a calculationf or instant 5% CashBack accumulating interest as though you had just put it in an interest bearing account as well. Hands down the 0% deal is a good deal assuming minimum pmt of 1.5%
i set it up so that you could change the minimum pmt as well. This should be the end all to everything

for instance
assuming 700/mo spending and the appropriate credit limit you could wind up with 6400 cash vs 2778 CashBack + accumulated interest this is with tiered interest rates over the next 5 yrs being 5% 5.5% 6% 6.5% 7%

im going to get in on this and switch most of my citi cars credit lines over to this card.

andy2812 said:This seems like a very good deal if you're diciplined enough to only use the card on qualifying purchases. By putting the money in a 5% account, without taking compounding into account, you're basically earning 5% on the money every year until you pay it off in 2011. That comes out to 20%-25% until you pay it off on any charges made this year. With the current 5% cards, you earn 5% this year and that's it. Seems like a no brainer to me.

let's not forget that the 5% savings rate will either go up or down depending on the Fed. this card is tempting nevertheless. If anything, I can stick it to the Man (oil men or women)