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How to Compare Low Rate Balance Transfer Credit Cards
These cards are best for...
Low rate balance transfer credit cards are ideally suited to people who are looking to clear up outstanding credit card balances and to benefit from low interest rates on the balance they transfer.
Because low rate balance transfer offers can last from 6 months to as long as it takes to repay your balance, these credit cards are suitable whether you feel you can repay you balance quickly, or if you want to repay it over a year or more.
If you do not want to re-move your balance, and you will take longer than 1 year to repay your outstanding credit card balance, then a low rate balance transfer credit card is the best option.
These cards are not suitable for...
If you feel that you could repay your outstanding credit card balance in 1 year or less, you would benefit much more from a 0% balance transfer credit card. 0% balance transfer deals offer 0% interest rates for an introductory period of anything from 6 months to 1 year depending upon the card you choose.
0% balance transfer credit cards can also save you more money in interest than low rate balance transfer credit cards even if you can't repay the balance in under a year. However, it is important to remember that you will have to move your balance again when the introductory period ends.
Knowing what's on offer...
It is important that you fully understand the different offers available to you when choosing a low rate balance transfer credit card.
Not all of the low rate balance transfer deals are the same, and they can vary considerably between the actual low interest rate charged on your transferred balance and also how long this low interest rate lasts for.
Aside from the actual low rate balance transfer deal, you should also be aware of how you should and shouldn't use your low rate balance transfer credit card, including knowing how not to jeopardise the balance transfer deal.
- Low rate balance transfers - but how low and for how long?
One of the main points to consider when choosing a low rate balance transfer credit card is actually how low the interest rate on balance transfers will be, and perhaps more importantly, how long this low rate will last for.
The lowest rate balance transfer credit card available can offer rates as low as 1.9%, barely much more than a 0% deal. However, these exceptionally low rates are usually limited to an introductory period of between 6 and 9 months.
It is unwise to be tempted by these offers, because if you can repay your balance within 9 months, or you are happy to re-move your balance at the end of the introductory period, then you might as well opt for a 0% balance transfer credit card.
The best low rate balance transfer credit cards to go for are the ones that offer a low rate on your balance transfer for the life of the balance, in other words, until you have repaid your balance in full.
The great thing about the 'life of balance' type of low rate balance transfer credit cards is that they really allow you the time to get on top of your credit card balances and repay them slowly, without the worry of ending promotional periods.
Low rate balance transfer credit cards that offer a low rate until you have repaid the balance in full include the Citi Platinum Life of Balance credit card.
- So what usage is safe and unsafe with a low rate balance transfer credit card?
It does depend on the exact low rate balance transfer credit card you choose, but as a rule of thumb, most of these credit cards will apply payments to lower rate balances first. That means your low rate balance transfer will be repaid before any purchases or cash withdrawals made with the same card.
So why is this such a big problem? Basically, if you use a low rate balance transfer credit card (that you have a balance transfer on) for purchases, your purchases will accrue interest charges but you won't be able to repay these purchases until you have first cleared your balance transfer.
It sounds like a pretty cunning ploy by the credit cards, and unfortunately it is, but it can all be avoided by using a different credit card for purchases, perhaps one with an introductory offer on purchases, or a simple low typical APR. You could even opt for a cash back credit card for your purchases, and earn yourself a little money back on your spending.
Doing this will allow you to benefit fully from your low rate balance transfer credit card and also still be able to use a credit card for your purchases, plus, you'll be able to repay both balances as you wish.
- Why cash transactions should be avoided too
Cash transactions are even worse than purchases when it comes to using a low rate balance transfer credit card. The same sneaky tricks will be used on cash transactions, but they will also be subject to higher interest rates and handling fees.
Cash transactions can include cash withdrawals, getting 'cash back' at the supermarket, buying foreign currency or traveller's cheques and now also include gambling transactions.
The best thing to do when it comes to cash transactions is use your debit card, and if you have to use a credit card, make sure it's the right one and get a low cash advance rate credit card.
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Compare low rate balance transfer credit cards
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