Different balance transfer credit card options

Balance transfer credit cards have become extremely popular over recent years amongst consumers in the UK, and many credit card holders have benefited from saving a fortune on interest repayments by transferring their costly existing credit card balances on to a balance transfer credit card. These credit cards are designed to eliminate or really cut back on interest repayments, and consumers that have high interest credit card on which much of their monthly repayment is being swallowed up in interest charges could really benefit from one of these cards.

Not everyone will benefit from a balance transfer card. These cards are designed to help you to save money on interest charges, and therefore those that will not benefit from these cards are consumers that tend to repay their credit card balance in full each month, as no interest is charged to accountholders that do this because there is no outstanding balance to apply interest to.

However, those that tend to make small repayments on their credit card balances rather than clearing the balance each month could really benefit from a balance transfer credit card. There are two different types of balance transfer credit card to choose from, and this is the 0% balance transfer credit card and the life of balance transfer credit card. The type of card that will best suit your needs will be determined by your repayment habits, and it is important to put some thought into which card is going to work out more cost effective for you, as otherwise you could end up paying the financial consequences.

0% balance transfer credit cards: A 0% balance transfer credit card is a type of credit card that, as the name suggests, offers a specified period of 0% interest on balances that are transferred on to the card from existing credit cards. If you have a number of high interest credit cards on which you have outstanding balances you could really benefit from this type of card. However, there are a couple of things to bear in mind. Firstly, as with any other credit card you will be set with a credit limit when you take out the card. You will only be able to transfer balances up to that credit limit. Also, most 0% balance transfer credit cards come with a transfer fee, which is typically 2-3% of the total amount being transferred onto the card, often with a minimum and maximum limit. Another important thing to remember is that, once the interest free period ends, if you still have an outstanding balance on the card you will be charged on the remaining balance at the lender’s standard variable rate.

You can benefit from a 0% balance transfer credit card if you are able to repay the balance transferred onto the card within the specified interest free period, as this means that you will not have to pay any interest at all. You should compare the different transfer fees charged by different card issuers, as these can vary from one card provider to another. You should also compare the interest free periods offered, as these can vary quite dramatically from lender to lender too. Another area to compare is the lender’s standard variable rate, so that you know what sort of interest rate you will be looking at in the event that you are left with an outstanding balance at the end of the interest free period.

Life of balance transfer credit cards: Like a 0% balance transfer credit card, the life of balance transfer card can save you a small fortune on the cost of your interest payments on your credit card debts. Like the 0% balance transfer cards you can transfer balances up to the credit limit offered on your life of balance transfer credit card. However, unlike the 0% balance transfer credit card there is no interest free period offered. Instead, the life of balance transfer credit card offers a very low rate of interest on your transferred balances, and this rate is offered for the life of your transferred balances, so you can benefit from this low rate until your transferred balances have been completely repaid. You will need to comply with minimum repayments and make sure that your repayments are made on time.

The life of balance transfer credit card is ideal for those that want to save money on their credit card balances, but are unlikely to repay the balance within the interest free periods offered on 0% balance transfer credit cards. These life of balance transfer credit cards allow you to repay the debt at an easier pace, with no date by which you have to clear the balance in order to enjoy the benefits. Another benefit of this type of card is that there is generally no transfer fee as there is with most 0% balance transfer cards.

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