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The Citi® Diamond Preferred® Card is what personal finance experts might call a no-frills card. There are no associated rewards or exciting benefits that you’d be dying to brag about to your friends, and the card’s design is rather simple.
However, the lack of a rewards program is especially striking. Everyone loves rewards cards, after all — 59 percent of all adults in the U.S. carry at least one in their wallet. So why would anyone settle for a “rewardless” card like the Citi Diamond Preferred?
Rewards credit cards are not for everyone
At first glance, getting cash back or points for purchases you need to make anyway seems to be a no-brainer. What could possibly go wrong?
“Credit card rewards are great, but only if you’re able to pay your credit card bills in full to avoid interest,” says Bankrate’s credit card analyst, Ted Rossman. “Otherwise, the math doesn’t work.”
It’s easy to see why. The average credit card charges over 18 percent in interest — yet the typical cash back return is just 1 or 2 percent on most purchases. So if you’re carrying a balance, the cash back you earn won’t make much of a difference.
“If you have credit card debt,” Rossman says, “your best bet is to prioritize your interest rate. Signing up for a 0 percent balance transfer card can pause that interest clock for many months to come.”
‘I was delighted to get approved’
Chaim Geller, founder of HelpMeBuildCredit.com, still talks about the Citi Diamond Preferred with affection. “I was delighted to get approved for [a] card with an 18 month 0 percent APR, which was the offer at the time,” Geller says. The Citi Diamond Preferred now includes a 0 percent intro APR offer on balance transfers for 21 months and on purchases for 12 months (16.74 percent to 27.49 percent variable APR thereafter).
Before he got the Citi Diamond Preferred, Geller was using another credit card with a 20 percent interest rate, which was brutal.
“When I bought my house,” Geller remembers, “I accumulated a ton of credit card debt for construction-related purchases. I noticed that, when paying the minimum payment, most of my payment was going toward the interest, but the actual debt was not going down much.”
When you only make minimum payments every month, it’s a sure-fire way to see your debt snowball and spin out of control. Geller advises that, if you carry a balance from month to month, remember to always pay as much as you can. Whatever you can afford to pay beyond the minimum may save you thousands in the long run.
The way out of debt
At some point, Geller felt he couldn’t ignore his mounting credit card debt any longer. He started looking for a way to end that situation once and for all, and that’s when he found the Citi Diamond Preferred. At the time, its introductory APR offer for balance transfers was for 18 months — but that was all he needed.
He sat down and came up with a plan. He would apply for the card, transfer his balance, pay off his debt during the intro APR period and never carry a balance ever again.
“I finally got an opportunity to really knock down the credit card balance interest-free,” says Geller. “And I wasn’t going to blow it. I liked the Citi Diamond Preferred because my payments fully went toward paying down the actual debt. I was finally able to tackle my credit card debt, and it was a lifesaver!”
Remain disciplined in paying off your balance
When you transfer your balance, Geller stresses that it’s important to remain disciplined. You should be careful not to make new debt while paying off your balance because the moment your 0 percent APR period is over, the interest on your unpaid balances will immediately kick in.
Currently, the Citi Diamond Preferred comes with an introductory APR offer on balance transfers for 21 months and on purchases for 12 months (after that, the variable APR will be 16.74 percent to 27.49 percent). While taking advantage of the intro APR for new purchases may be tempting, doing so has its drawbacks. Buying new stuff — especially big-ticket items — when you’re trying to pay off debt means that you’ll risk increasing your debt further.
Geller believes in keeping things simple. He used the Citi Diamond Preferred to pay down his debt during the intro APR period, and he used cash or a different credit card for his everyday expenses. And he made sure to pay it off every month, too.
If you don’t need 21 months, there are other cards with lower fees
The Citi Diamond Preferred has a balance transfer fee of 5 percent (or $5, whichever is higher). This fee is on the high end; 3 percent seems to be more prevalent. If you don’t need 21 months to pay off your debt, there are many balance transfer cards available that have a lower balance transfer fee than this card.
“When I applied for the Citi Diamond Preferred, the offer was 18 months,” Geller says. “I knew I’d likely need all [of] that time to get rid of my debt. But if 12 or 15 months is enough for you, you could save [money by choosing a card] with a lower balance transfer fee.”
Is the Citi Diamond Preferred a keeper?
It’s been years since Geller paid off his debt, but he has no plans to ditch the card, even though he has no interest in the basic benefits the Citi Diamond Preferred offers.
“If a card does not charge an annual fee, I usually like to keep it open so it helps me build credit,” Geller explains. “But I would only use it sparingly every now and again to keep it active, as it doesn’t earn rewards and there are no worthwhile benefits.”
The bottom line
The Citi Diamond Preferred Card is not suitable for cash back or rewards hunters. It won’t help consumers get into a fancy airport lounge or provide them with cellphone coverage. However, in the right hands, it can save a substantial amount of money by providing 21 months interest-free to pay off debt that might have accrued high interest with other cards.
Still, before you take the plunge, be sure to compare the Citi Diamond Preferred with other Citi credit cards or top balance transfer cards to see if there is one that better fits your needs.