A balance transfer for life credit card allows you to comfortably repay your credit card debt without the pressure of a specified time limit.
A balance transfer for life offer may not initially seem as attractive as a 0% interest balance transfer credit card or example. However, where the interest rate on a balance transfer for life credit card may be around 5% you don’t have to be in any rush to repay your balance as you do on a 0% interest credit card offer. Being able to comfortably repay your transfer balance is just one benefit of a balance transfer the life credit card, so read on to find out more about how to choose the best card, how to use your card within the terms of the offer, and how to make the most of a balance transfer the life of well within your circumstances.
Features Of Balance Transfer For Life Credit Cards
While you will have all the time in the world to repay your transfers credit card balance, that doesn’t mean that you have to be stuck with that balance to the rest of your life. Instead, when you know more about the features of a balance transfer of life credit card you will be able to better use it to your advantage to become debt free sooner and manage your credit cards better in the future. Features of a balance transfer the life credit card you should consider:
- A low interest rate until your balance is repaid. The low interest rate on balance transfers the life credit card is not the rest of your life but for the rest of the life of your balance. While it is important to compare what each credit card provider considers the life of a balance, as some will offer the lower rate just for one or two years rather than until the balance is fully repaid, on most balance transfer the life credit cards you will be able to enjoy the low interest rate until your balance is repaid in full.
- Look for a fixed low interest-rate on your for life balance transfer credit card. Typically the interest rate on a credit card is variable because the provider reserves the right to raise their interest in line with movements by the Reserve Bank of Australia. However it is possible to find a for life balance transfer credit card with an interest rate which is fixed until you have repaid your balance. This can help you further budget your credit card repayments now and into the future because you know your payments will always go down as you reduce your balance and your interest rate remains the same.
- A variable interest rate depending on how long you will take to repay. In your choice between fixed and variable interest rates on your for life balance transfer credit card, consider where official interest rates will be in their cycle when your balance is fully repaid. If you think you will need five years to repay your balance then you could benefit from a low fixed interest rate to avoid rises in rates from your provider in response to the RBA’s decisions. However if you have budgeted to repay your for life balance transfer within one to 2 years consider the fact that interest rates are still rising from the emergency levels imposed during the GFC and once interest rates have already started to rise and rise consistently, it is not always the best time to fix because you are nearing the top of the cycle and will be fixing at the highest rate.
- Look at the lowest interest rate. This may sound obvious but it can be easy to become distracted by a rate which seems low when compared to your standard 20 percent interest rate however when you take the time to consider all for life balance transfer interest rates you will see that rates can vary significantly between the providers, and you don’t want to miss out on locking in the lowest rate.
- The low rates may not always mean lower payments. The minimum monthly payment on for life balance transfer credit card will be set by the provider. Therefore don’t expect the monthly repayment to be significantly lower than what you have been paying because each provider will have their own calculations for minimum payment amounts.
- Most Australian credit card providers allocate payments via a payment hierarchy. This means that the oldest balances or purchases are repaid first when you make a payment on your card, so if you make a new purchase on your for life balance transfer credit card then your monthly repayments will continue to go towards your transferred balance while your new purchase will be charged higher interest.
- You will be saving interest compared to your standard credit card. Even though for life balance transfer credit card will still charge you interest it will be significantly less than what you are paying on your standard card. This means you can save hundreds or even thousands of dollars each year simply by making a balance transfer.
- You can save even more interest by repaying your balance sooner. Just because your transferred balance is being charged a lower interest rate and that low interest-rate is fixed for life, you can still save on interest charges by concentrating on repaying your balance faster. Even the lower interest rate charges can add up over time, especially over the length of for life balance transfer, so rather than becoming complacent with a lower interest rate credit card make savings in every possible way.
- Make your transfer in your credit card application. A balance transfer credit card is primarily a credit card so when you apply you are applying for a new credit card. You only take advantage of a balance transfers for life, when you actually make the transfer, until then you have simply added another credit card to your wallet. If you don’t have the option to make transfer in the application, make it as soon as possible after your credit card is approved either using the forms sent by your provider, or by using phone or Internet banking.
- You can only take advantage of for life balance transfer if you transfer a balance from a different provider. For example, you can’t take advantage of Westpac for life balance transfer offer to repay an existing Westpac credit card. You will need to transfer a non-Westpac credit card balance to be eligible.
Costs Of Balance Transfer for Life Credit Cards
While you already know that you can’t avoid interest charges altogether on a for life balance transfer card there are other costs you need to consider when you make a balance transfer. To avoid unwanted charges on your balance transfer for life credit card, beware of:
- Late payments and going over your credit limit. Not only will credit card charge you when you miss the monthly payment or when you exceed your credit limit, but a balance transfer for life credit card may also penalise you by taking away your low interest rate. Make sure you read the credit card application contract to check whether missing the monthly payment or exceeding your credit limit will avoid your balance transfer for life offer.
- High interest rates charged on new purchases. A high purchase interest rate can become a significant cost over the term of a for life balance transfer card. To avoid being charged this cost, do not make new purchases on your balance transfer card until your transferred balance is repaid in full. New purchases will continue to attract a high purchase interest rate because your monthly repayments will be directed to your oldest balance first which is your transferred balance.
- Annual fees. On a shorter balance transfer offer an annual fee is not such a concern because your offer will expire sooner. However if you are using for life balance transfer credit card then you are planning to hold the credit card account of the several years and will therefore pay for the annual fee many times. The credit card annual fee can be as low as zero and as high as several hundred dollars and while this may not seem much of an expense for one or two years consider how much sooner you could repay your balance if that $200 a year annual fee was being paid off of your balance rather than being paid to the credit card provider.
- Transaction costs for payments. The whole point of a balance transfer credit card is that you are planning to make consistent payments from your wages or everyday transaction account. Therefore consider how much those transactions will cost you if you are charged each time you make a payment to your balance transfer credit card. If your current transaction account has higher transaction fees, considered a transaction accounts on offer from the same provider as your balance transfer credit card as transfers between accounts from the same provider are often free. Plus transfers between accounts from the same provider are also the instant, meaning your payment will be credited to your balance transfer credit card moments after you make the payment, and with interest often calculated daily on credit card balances you can be saving 2 to 3 days interest where your money would normally have been in transit.
- Ask your current credit card provider for a for life balance transfer offer. Before you go through the application process for a new credit card with a for life balance transfer offer, consider approaching your current provider for a better deal. This can be especially effective if you have other financial products with this provider as well, for example of home loan savings account and a transactions account.
- Don’t give in to promotions. Balance transfer credit card providers may often try and entice you into spending on your balance transfer card. They will notify you of rewards programs offer you cashback deals or the low interest rate promotional periods on your purchases. Don’t give in to these promotions because your new purchases will be charged a higher interest rate is not right away, certainly before you have repaid your transferred balance and your interest savings on your transferred balance will have been for nothing.
Who Is Best Suited To A Balance Transfer For Life Credit Card?
There are so many different types of balance transfer credit cards because there are so many different types of Australians struggling with so many different types of credit card debt. Therefore consider whether you are the type who could benefit from for life balance transfer credit card. A balance transfer for life credit card is best suited to:
- Someone with a high balance. If you already have a credit card with a high balance which you are struggling to repay even on low interest-rate or a zero interest rate credit card, it is going to take some time to repay. Therefore rather than putting yourself under more pressure to repay your high balance within a promotional low interest period, you can benefit from enjoying a low interest rate for as long as you need it.
- You are transferring balances from several cards. A balance transfer credit card can accept a balance from more than one credit card, as well as from store cards. Therefore when you combine the balances of all your outstanding credit cards you may find you are in the same situation as above where you need more time to repay that balance. As a result you too can benefit from for life balance transfer credit card offer because you don’t need to rush to repay your accumulated debt.
- Someone with another credit card or a debit card. It doesn’t make sense to make payments on your balance transfer credit card until your transferred balance is repaid in full. Therefore you will gain the most benefit from a balance transfer for life credit card if you have another credit card you can use for online and everyday purchases, or a debit card which allows you all the functionality of a credit card but which accesses your own money from your linked transaction savings or cheque account.
- If you need reliability and peace of mind. Some people thrive on unpredictability and risk, but if you fit into the category of someone who thrives on routine and certainty then you will be suited to for life balance transfer credit card. There will be no adrenaline pumping last-minute rush to repay your balance before the end of the offer, and you won’t have to worry about movements in the official interest rate because you’re for life interest rate can be fixed.
- If you are on a tight budget. Transferring to a low interest rate balance transfer for life credit card can make your monthly credit card repayments more affordable. This can benefit you if you are on a tight budget and have been struggling to meet your credit card payment obligations. Rather than default on your credit card because you can’t make the payments, you can transfer to a lower interest rate credit card and enjoy lower monthly payment requirements.
- You have expenses coming up in your future for which you need more cash flow. Perhaps you are planning a wedding or thinking of applying for home loan and you need to get your credit card debt and your bills under better control. A lower interest rate balance transfer credit card can free up more cash each month for cash flow purposes, and can also make it easier to pay down your balance so it appears you are better managing your credit card debt when you apply for a loan.
- You are trying to repair your credit history. If you don’t want another mark on your credit report then you may be reluctant to make numerous balance transfer credit card transfers to follow a low or zero interest rate. Instead you can make one transfer to for life balance transfer credit card and know that you have a low ongoing interest rate for as long as you need it, and just one transfer on your credit report for life too.
How To Use Balance Transfer For Life Credit Cards
Using a balance transfer the life credit card is not as simple as just completing an application form for a new card. You need to always remember that while the provider is offering new this low interest-rate balance transfer offer, they are also likely to have their own interests at heart before yours. So here are some things which your bank may neglect to tell you about how to use your balance transfer for life credit card, but which can have a significant impact on the success of your balance transfer and balance repayment:
- There may be a transfer deadline. For a for life balance transfer offer to apply to your existing credit card balance you may need to transfer it to your new for life balance transfer card within a certain number of days. If you miss this transfer deadline you can find yourself with just another credit card which may be charging you an annual fee, but most importantly the balance transfer for life offer which you picked out as the best of the your needs may no longer be available if you don’t act fast.
- Don’t make cash advances. On a standard credit card cash advances typically don’t qualify for an interest-free period and on a balance transfer credit card your cash advances will also earn a higher interest rate right away, while your payments continue to be applied to your transferred balance. A cash advance rate can sometimes be as much as 10% higher than the standard purchase interest-rate so not only are you earning interest when you are trying to repay in existing balance, you are paying a significant amount of interest.
- Don’t make new purchases. While the purchase interest-rate on a balance transfer credit card may seem affordable, you should avoid making purchases until you have repaid your balance in full. Your new purchases will continue to earn interest until your balance is repaid so the savings you have made in transferring your balance will be eaten up by the new interest charges applied to your purchase.
- Keep the card out of sight. Over a long balance transfer period it can be easy to forget the importance of not making purchases on your balance transfer card. Therefore make sure to avoid every opportunity for temptation by leaving your card at home out of sight and out of mind and out of debt.
- Set up an automatic payment to keep your card out of your mind. When you need to get your balance transfer credit card out to make a payment each month you will be reminded that there is another credit card their available for you to spend on if you’re tempted by a new pair of shoes a new restaurant opening or simply an extra bottle of wine. Therefore if you set up an automatic payment from your transaction account each month to your balance transfer credit card your repayments will be taken care of and you won’t have to think about using your balance transfer credit card. You can also set the payment to be the same amount each month so that even as your balance decreases and your minimum monthly repayments decrease, you continue to pay more than the minimum required repaying your balance sooner.
- Pay as much as you can afford. It can be tempting to settle into lower monthly repayments when your balance attracts a lower interest rate on for life balance transfer card. However if you can continue to make the same monthly repayments as you were on your higher interest rate credit card or more, you can truly take control of your credit card debt and stop it from controlling you. You will be out from under the often crushing costs of credit card debt and the continuous connotations of bad debt linked to your name. You will also forge new and better financially responsible habits with regards to credit card payments, which can help you avoid the need for another balance transfer in the future.
A balance transfer for life can be for as long or as short as you need it, but as long as you make sure to use your card within the conditions of a balance transfer credit card, you can save money and time while you become debt free. Follow our simple guide here to help you choose the best balance transfer for life credit card you, and to make sure you know how to use your balance transfer credit card once you have it.
Posted on Tuesday, April 27th, 2010 at 10:39 am
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