How to Compare Life of Balance Transfer Credit Cards: part 2

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Life of balance transfer credit cards offer a very low rate of interest on balances moved over from other credit cards.

This promotional rate will often last for the 'life of the balance', which is until you have repaid the balance in full - removing any of the worries of ending promotional periods and having to transfer your balance a second (or third) time.

It's important to know what to look for and what to watch out when choosing a life of balance transfer credit card - not all cards where created equally - and it'll save you money to pick the best deal.

What to look for...

- The lowest balance transfer rate
It may sound obvious, but choosing the lowest balance transfer rate will save you money.

However, you should also take into consideration how long the promotional rate will last and the cost of any transfer fee.

- How long will the low rate last?
The majority of life of balance transfer credit cards offer a low rate on your balance transfer until you have repaid it in full.

There are some cards that will offer the low rate for a set period of time, however this will usually be a few years, so you'll still have plenty of time to make good use of the low rate of interest and repay your balance.

What to watch out for...

- Balance transfer handling fees
Like their 0% balance transfer counterparts, life of balance transfer credit cards will sometimes charge you a handling fee for transferring your balance to the card.

It is possible to find 'fee-free' life of balance transfer credit cards, and the search is much easier than for 0% credit cards.

Both the Citi Platinum Life of Balance credit card and the Barclaycard Platinum Life of Balance credit card offer fixed low rates for the life of the balance transfer and waive any balance transfer handling fee.

If the life of balance transfer credit card does charge a transfer fee, it will usually be around 1% - 3% of the balance being transferred - this is about a percentage cheaper than transfer fees to 0% cards - capped transfer fees with a set maximum charge are also more common on these card types.

- How the card handles payments
It is generally advised to use a separate card if you need to make any purchases or cash withdrawals.

This is because most card issuers will only allow you to repay your cheapest balance, and only when this is repaid will you be able to pay off any standard or higher rate balances.

This problem is always accentuated when making use of a balance transfer deal, because your cheapest balance is your largest balance - so any purchase or cash withdrawal transactions made on the card will become trapped behind your balance transfer accruing interest charges, ultimately forcing you to either promptly repay your balance transfer or transfer the whole lot to a new card.

Don't forget!

- The window of opportunity
Life of balance transfer credit cards offer a window period in which you can transfer your balance to the new card to qualify for the promotional rate.

This window period, though sometimes longer, can be as short as 30 days - so remember to find out how much time you have and transfer in good time so you don't miss out.

The fail-safe method is to make your transfer during card application. If you cannot do this, try to arrange the transfer as soon as possible - either using the 'balance transfer' forms sent out with your new card or via telephone or online banking once your account has been opened.

- Variable interest rates
The majority of life of balance transfer credit cards will offer a rate that is variable, although some cards do offer a fixed rate.

A variable interest rate will fluctuate inline with the Bank of England's base rate, so any rises in the base rate could see the rate of interest on your balance transfer increase too.

If the life of balance transfer credit card offers a fixed rate, then the rate you are given will remain the same for the duration quoted - even if the base rate increases (or decreases).

- A new bank or building society
When choosing a life of balance transfer credit card it's important to remember that you cannot transfer balances between credit cards issued by the same bank or building society group.

Choose a life of balance transfer credit card that is issued by a different issuing group than your current card.

- To play fair...
Balance transfer deals are promotional - and as such, credit card companies reserve the right in the terms and conditions of the card to remove them if you don't play fair.

It's vital to make at least the minimum payment each month on your credit card - if you're late with a payment or you miss one altogether (or you exceed your credit limit) you could see your balance transfer rate jump from 5% to 16% in the blink of an eye.

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