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Credit Cards: Why 'Life of Balance'

is better than 0% Balance Transfer

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Life of Balance Credit Cards work in a similar fashion to 0% Balance Transfer Cards but you have to pay a fixed interest rate until the balance is paid off. For example -
  • The XYZ credit card might offer a 5.9% life of Balance Transfer
  • If you transfer say £3,000 to this card you'll be charged at 5.9% until the whole balance has been paid back

For many people, especially those with large debts, a life of balance Card (assuming the interest rate is low) is normally a far better deal that a 0% transfer card because with those the 0% offer only lasts for a set period of time, usually 6 - 15 months.

So if you have £4,000+ on a Card you could theoretically take several years to pay the debt off slowly with a life of balance Card. And if the rate is 5.9% that's not a bad deal - try getting it cheaper and you'll struggle.
Life of Balance Cards are flexible - and that's a good thing

This site has 10 Secrets to Good Personal Finance and Secret 3 states -

Buy simple and flexible - you can't read the future

Flexibility is what you always want to try to seek with financial products especially when borrowing money. So with a life of balance Card you're free to alter the amount payable per month.

Of course you always have to pay the minimum balance, usually 3%. Some months money might be tight, in which case pay just the minimum balance. In other months you might have excess money and so make far larger payments. With a personal loan you can't operate in this fashion.

Finally, if you do get a life of balance transfer card don't forget the two Golden Rules that must not be broken.

See also

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4 steps to a clean up any mistakes
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