Balance Transfers: 0%, For Life, or Flat Rate?
Which kind of balance transfer credit card offer is right for you?
Low Rate for Life
With 'low rate for life' offers, you don't get the 0% interest rate you get with introductory offers, but balance transfers will be charged interest at a much lower rate than purchases, and this rate will last until the balance is cleared - there's no time limit.
The drawback comes with what is known as Allocation of Payments. This means that your repayments will be used to pay off your cheapest debt first, i.e. your transferred balance. Any purchases you make using the card will be charged at the full standard rate, and will continue to attract interest at that rate until the balance is cleared.
Pros:
- A lower rate for life means you'll pay less interest, especially if you don't plan to clear your balance within the length of an introductory period
Cons:
- All repayments you make will go towards paying off your lower rate balance transfer first, so if you use your card for purchases everything you spend will attract interest at the higher standard rate until the balance transfer is fully repaid
Home - Credit Cards
