Lifetime Balance Transfer

by : StephanieStephanie Wendy

The majority of people with a large credit card debt either stick their head in the sand, ending up paying hundreds in interest, or they pay a fee to move their debt to one of the popular 0% balance transfer credit cards on offer.

However, many of those people who switch to one of these cards don't actually clear their balance before the six or 12 month introductory offer expires. This leaves them in the same situation as before - paying an average of 17.27 per cent interest (, 2007)

There is an alternative

before availing one. Choosing a lifetime balance transfer credit card offers you a way to really make a dent in your debt without a six or 12 month constraint.

Despite their name, most of these cards don't actually offer a "lifetime" rate. Rather, they offer around five years at a very low rate on your transfer - between around 3.9 per cent and seven per cent if you shop around.

Remember though, just because you have a low rate doesn't mean you're not paying interest - you still want to clear you debt as quickly as possible. Undertake research to find the best balance transfer credit cards.

Will it work for me?

These cards particularly suit people who have a large debt that they won't be able to clear before the end of a promotional period on a zero per cent credit card.

Also, banks have long been wise to those people who continually switch to avoid paying off their debt and any interest. This means that you'll not only have to pay a fee of around three per cent every time you want to transfer to a new card, you might also find yourself being refused your next card as the crackdown on consumer credit hits the high street.

Don't use it for spending though

While these cards are great for clearing hefty debts, they shouldn't be used for spending. Payments against all credit cards are tiered so that you pay off the "cheapest" debt first.

This means that if you make a transfer but then go on spending on that card, any payments you make against your debt will go towards paying off the balance transfer first, and only once that is cleared will you be able to start paying off all those things you've bought.

Even if your card carries a 12 month interest free offer on purchases, by the time you start paying for those purchases you'll probably be back on the standard rate.

Is it for me?

You'll still be paying interest - so you'll be less likely to ignore your debt - but it will be at a much lower, more affordable rate.

So if you've been weighed down by the burden of your debt for too long, a could be just what you need to finally be debt-free.