How Do Life of Balance Transfer Credit Cards Work?

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Life of balance transfer credit cards offer a way to clear up existing credit card balances, giving you the chance to repay the debt gradually without having to battle against high monthly interest charges.

Life of balance transfer credit cards offer a low rate of interest on your transferred balance. Though this is not a 0% rate, it is still much lower than any standard interest rate you may be currently paying.

How long will I have to repay my balance transfer?

The majority of life of balance transfer credit cards give you a low interest rate on your transferred balance until you have repaid the debt in full.

This gives you the added peace of mind that the promotional rate will not end, and you can repay your credit card debt slowly over time, repaying just what you can comfortably afford to each month.

There are some life of balance transfer credit cards that are not strictly for the 'life of the balance'. However, the term they do offer the low rate for will be a number of years, so you'll still have plenty of time to repay your balance gradually.

What are the benefits over a 0% balance transfer?

Life of balance transfer credit cards can be more beneficial than a 0% balance transfer credit card for people who have a large debt to transfer that they know will take longer than a 1 year to repay.

Although, life of balance transfer credit cards do charge a small amount of interest on the balance, they remove the stresses of ending promotional periods and having to move your balance again.

In short, they are the simple solution to credit card debt management - once your balance is moved, you can enjoy a very competitive cheap interest rate until the debt is fully repaid.

- When would a 0% balance transfer credit card be more suitable?
If you think you can comfortably afford to repay your current credit card balance within a 1 year period, you would be better to opt for a 0% balance transfer credit card.

0% balance transfer credit cards will offer you a balance transfer option that will not charge you any interest for a period of up to 1 year - thus, saving you more money in interest charges.

What you should be aware of

- Spending on a life of balance transfer credit card
Generally speaking, credit cards are not the multi-tasking tools they often advertise themselves as.

A 'balance transfer' credit card should be used as such, and once you have transferred your balance to a life of balance transfer credit card, it would be advisable to hide the card at the back of your drawer and focus on repaying the balance.

If you are tempted to spend on your life of balance transfer credit card, bear in mind that card issuer's will generally always allocate your payments to cheaper rate balances, like your balance transfer, and any spending - often charged at a higher rate - will become trapped behind your cheaper debt, accruing interest until you first repay your entire balance transfer.

In effect, spending on a life of balance transfer credit card can pretty much see you back where you started, with mounting interest charges and the need to transfer again!

- Spending exceptions...
There are a few exceptions to the rule - but these can create their own problems.

If a life of balance transfer credit card offers a 0% introductory period on purchases, it can sometimes be 'safe' to spend on the card during this period.

However, it is vital that this purchase balance is repaid before the end of the 0% period - if not, the purchases will move to higher rate than the balance transfer and become trapped.

- What fees are involved?
Balance transfer handling fees are slowly starting to creep their way into the life of balance transfer market.

However, you can still find good life of balance transfer deals that do not charge a handling fee for the transfer.

Where cards do charge a transfer fee it will generally be cheaper than the fee charged for transferring to a 0% balance transfer deal - and often the fee will be capped at a maximum charge - which can save you money if you are going to be transferring a large balance.

- Situations when the life of balance transfer deal may end
Life of balance transfer deals are a way for card issuers to entice you to move to their credit card. No credit card company ever existed to not make a huge amount of money for its directors and shareholders.

Because of this, and with any credit card deal, you need to play fair to keep hold of your privileges.

Life of balance transfer deals can end rather promptly if you're late with a payment or you miss a payment altogether. The promotional rate can also be taken away if you exceed your credit limit - although, this is unlikely to happen if you do not spend on the card.

Remember to always pay on time and don't go over your credit limit. Do this, and you'll be able to enjoy your promotional rate until you're debt is fully repaid.

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