Just Credit

There are so many different credit cards available that there is also limitless information available on the internet about these cards, how to compare them and which one is right for you. One feature of credit cards which is advertised quite heavily is a balance transfer rate or offer running on a certain credit card, but before you go comparing offers, find out what it really means.

A balance transfer is going to be attractive to you if you have a significant card debt. By transferring that debt to a balance credit card you will be able to benefit from more time to repay your debt and lower interest rates. However, the choices available to you in balance transfer cards is as varied as those choices available when choosing any other sort of financial product so you need to compare each offer based on its rates and fees before you choose a card with a balance transfer. Remember, some cards have transfer fees where as others will not, check the terms and conditions before applying.

One type of balance transfer offer you may be considering is the 0% interest balance transfer, however it is the lifetime balance transfer credit cards which we will describe here, for those of you who have large credit card debt to repay, or want to stretch your repayments over a longer period of time. A lifetime balance transfer credit card applies a low interest rate to your transferred balance for longer than the standard 12 month period of a 0% interest card. It is important to note that not all lifetime balance transfers are for a lifetime, some are just for a little longer than normal, for example one to five years; if you do some careful shopping you can also find lifetime balance transfer credit cards which offer a low rate for the life of the balance, no matter how long that may be. A lifetime balance transfer credit card also offers a very low interest rate, and where the standard interest rate on a credit card is around 17%, where a balance transfer credit card can offer an interest rate at an average of 1.43%.

Before you choose a lifetime balance transfer card, make sure it is right for you; are you someone who doesn’t want to chase the 0% interest balance transfer offers and fill out new applications when the end of the promotional period is approaching? Are you struggling with your credit card debt and can’t meet your monthly repayments easily, or just want to be able to make more of a dent in your debt? Then you could benefit from comparing the many balance transfer offers available online or in your local bank branch.

Important Trap to avoid when using a card you have recently transferred your balance to
When you transfer a balance to a new card there is 1 trap that can get you slugged with high 11+% interest rates. Logically you would imagine that if you made new purchases on a credit card and repaid them within the interest free period everything would be fine. Unfortunately this is not the case, when a new purchase is added to a card that has an existing balance on it, the balance is repaid with any repayments you make and the new purchases are left to gather interest. It is crucial that you do not make new purchases on your new card that you transfer your balance to to avoid this situation.

How to avoid the transferred balance card trap and still have enough money for day to day living
An easy way to avoid this trap is to keep your existing card open and make new purchases on it. Your existing card will have its balance paid off by the new card you have opened. Your old card will have your same credit limit that you had before and you might have already paid for the annual fee. When you make the purchases ensure you payoff your balance before the end of the interest free period to avoid paying extra interest. The crucial thing here is to use your new card to repay your debt and use your old card to pay for day to day expenses. The easy thing to do is to just close your old card because it is too much of a temptation, although it is best to keep it to finance your living and avoid the extra interest you could incur.

Note: This is dependent upon the terms and conditions of the card that you select. You should always read and consider the terms and conditions of the card that you apply for. The key areas to consider are the repayment, interest free days calculation and the fees sections.

Dylan Connerton writes for Credit Card Comparison a website where you can make a comparison of credit cards including lifetime balance transfer offers in Australia.