Although many people use zero percent balance transfer deals to pay off their credit card debts, this solution may not suit every individual. In some cases it may be worth considering a lifetime balance transfer deal instead.
This kind of credit card offers the individual the chance to transfer their balances from other cards. Unlike a zero percent offer which may only last for a limited time, this product offers a lifetime balance transfer. There is no limit given to the offer which will apply until all of the card debts are repaid.
How do Life of Balance Credit Cards Work
On a basic level this kind of deal works like any other balance transfer. The individual takes out the card and then moves over their existing balance(s) from other credit cards. The aim is usually to take control of debt and to pay it off faster at better rates.
The difference between a lifetime balance transfer and other similar offers is primarily the fact that this kind of deal has no set end date and it is like asking what is the best online casino? Whilst a 0% offer may last for a set period of time before the card defaults to its standard APR, a life of balance deal lasts for as long as the cardholder needs to pay off what they owe.
This kind of card cannot offer deals as low as zero percent. But, these cards generally come with lower than standard interest rates which could make it a lot cheaper to pay off debts.
Why Consider a Lifetime Balance Transfer Deal
In some cases this may suit the individual better than a short-term or limited offer. Those with significant card debts, for example, may find that a 0% balance transfer won’t last long enough for them to pay off all that is owed.
It is, of course, possible to move from 0% deal to 0% deal until all debts are repaid but this can be time-consuming and costly. Balance transfer fees will usually be payable with each switch to a new card and this can add to debt repayment costs.
A low interest rate lifetime deal, however, will come with one fee and, in some cases, no fee at all. Even though interest will be charged, this may work out cheaper in some cases. This generally comes down to how much debt the individual is carrying and how much money they can spare to repay what they owe.
Things to Consider Before Taking Out a Life of Balance Offer
It may be worth spending a little time to look at the general pros and cons of life of balance deals before choosing this as a solution. Also, not all lifetime balance transfers are the same and it is worth checking out fees and interest rates to try and find the lowest cost offer. This can be done online in a matter of minutes via credit card rate comparison sites.
It is also important to check the terms of any life of balance deal. Bear in mind that the low interest rate offered may only apply to the balance transfer itself and not to new spending. If this is the case then it is important to check the underlying APR. In some cases this can be a lot higher than the deal rate which could wipe out the cost advantages of this kind of offer.
Those with smaller debts to pay off or more cash available for faster repayment may find that a 0% balance transfer card will suit them better than a lifetime balance offer.
How to Compare Balance Transfer Credit Cards
Most people looking at credit card balance transfers want to deal with existing card debt. Transferring money that is currently owed on other cards to a new deal can save money and help them clear what they owe. Getting a 0% offer, for example, can give an individual time to repay their debt and to put interest charges on hold while they do so. But, not all deals here are the same. A consumer that takes time to think about what they need and to compare costs may well find the best solution.
How to Work Out Which Balance Transfer Deal Is the Best
Although most balance transfer deals work on the same principles, each consumer will have their own circumstances to consider. If the aim here is to pay off existing borrowing then the consumer needs to consider:
- How much they have to pay off from existing cards.
- How much the transfer fee/administration cost will be.
- How long the 0% deal will last for.
- Which interest rate will be charged once the deal runs out.
In an ideal world the consumer will get a deal that gives them enough time to comfortably pay off their existing card debts together with the set up cost they will be charged. So, to make a start, it may be worth looking at what they will need before they choose a deal.
The easiest way to do this is for the individual to:
- Total up existing credit card commitments and add any fee costs to them.
- Work out how much can be comfortably spared each month to go towards repayment.
- Divide the total debt by the estimated monthly repayment amount to get a clearer idea of how many months they will need a balance transfer for to becomes debt free.
So, if the calculation here shows that the individual will be able to repay what they owe in 12 months, then they will know that they ideally need a deal of this length. Anything over that timescale will be fine, anything below it may need an alternative solution.
How to Deal With Debts That Exceed Standard Balance Transfer Time Limits
For some, one balance transfer deal will not give them enough time to repay everything that they owe. If a calculation shows that this will be the case then another comparison factor comes into play. In this case, the consumer needs to consider the interest rate that will be charged on the card when the deal runs out. This may be higher than that given to a standard credit card and, as soon as it is applied at the end of the transfer offer, it will add interest to any money that is outstanding.
Some consumers will simply take their transfer deal and throw as much money as they can into their repayment pot every month to reduce their debt. They will then, at least, have made some in-roads into paying off what they owe and may feel more comfortable managing what is left over in the future. Others will simply start to look for another balance transfer deal when the first one comes close to its end. A low interest lifetime balance product may also be worth considering.
How to Find the Best Balance Transfer Credit Card Offers
The easiest way to move forward now is to use an online credit card rate comparison site. These sites bring together deals and offers and looking at a couple will give the consumer an instant view of which deals may suit them best and which will be the most cost effective. A balance transfer online calculator may also be a good way of assessing cards.
Consumers looking to repay debts with a credit card balance transfer deal should look at the terms of any offer before they apply. Bear in mind that it is essential to make at least a minimum repayment every month in good time. Failure to do so could invalidate the deal and see the card revert to its standard rate.