Credit card providers are now introducing the “life of balance” concept

As credit card companies look for original ways of attracting new customers, the “life of balance” concept has been picked up by a handful of providers. Designed to avoid the “credit card tart” syndrome, where a customer switches cards as soon as the introductory 0% offer runs out, they offer low interest rates until the balance is paid off. Here’s how they work:

Interest rates

The credit card provider still wants to make money, so you will be charged interest on your balance, but it will be nothing like as high as a normal credit card standard rate. Instead, your interest rate will be much more similar to that of a standard loan – and often even less than that. Rates are set by the credit card company and begin at just under 4% - rising to around 6%.

Period

Life of balance credit cards offer you a fixed interest rate that lasts until you pay your balance off in full. This means that you don’t have to worry about paying as much as you can in three months to take advantage of the interest rate – you can budget each month so that you can pay off as much as you can afford at a much lower interest rate than if you leave your balance on your current card.

Current life of balance transfer cards

There may only be a handful of companies offering life of balance transfer deals at the moment, but if they are successful in attracting new business, expect other providers to follow suit. Currently, the following cards offer a life of balance transfer deal:

• Sainsbury’s
• Marks & Spencer
• Intelligent Finance
• Halifax
• Lloyds TSB
• CitiBank

If you’re looking for a way to reduce the interest payments on your credit card debt, a life of balance card could be exactly what you’re looking for. You can choose whether to just transfer your balance to the new card and pay off your debts faster, without putting any extra purchases onto it; or you can use it as your primary credit card – although you should check the purchase interest rate offered before you decide. A life of balance transfer card gives you the low interest rate and the time you need to regain control of your credit card debt.

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