In the past many people have switched their credit card debts onto a 0 percent balance transfer credit card, which has given them a long period of interest free credit within which to repay the transferred balance without being charged any interest on the debt. However, these cards usually charge a balance transfer fee of around 2-3 percent of the amount being transferred, and in some cases this can come to a lot of money, which may put people off from doing this.

Industry officials have recently said that a more suitable alternative for those that do not wish to have to pay these costly transfer fees would be the life of balance transfer credit card. In the same way as the 0 percent balance transfer card consumers can transfer their existing credit card balances on to these cards. They are then charged a very low rate of interest on the transferred balance for the life of the balance, as long as they ensure that they make at least the minimum monthly repayment required.

One credit cardholder recently stated: “I wanted to try and shift my debt from my existing cards, which charged a high rate of interest, to an interest free balance transfer card, but providers were asking for a large amount by way of transfer fees. I then decided to transfer to a life of balance transfer card, which saves me money in interest and gives me more time to clear the balance that I transferred.”

Recent research done by the Abbey has shown that as many as 3 million people will be joining in on the credit card changeover.  According to the Abbey it has become quite a regular occurrence at this time of year with many people of the UK trying to re-arrange their finances for the year ahead. 

The average amount that will be transferred is thought to be around the £ 2000.00 region and it is thought that this is most likely to happen in the first three months of 2009.

Abbey’s Head of Credit Cards advised “The New Year is an ideal time for people to review their finances. By transferring a credit card balance to a card with a 0% introductory offer, consumers can ensure they are managing their finances as effectively as possible.”

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Along with this another twelve cards have put up the interest on cash advances sometimes being an additional 5% interest added onto what is already an expensive way of getting cash.

11 balance transfer cards are also being changed by some providers where the transfer fee has gone up or there has been a reduction in the amount of time you have the 0% balance transfer period for.

Moneyfacts have noticed that in the last three months the average interest rate has risen from 16.8% to 17.2%.  Analyst for the group, Michelle Slade says “During the past year, card companies have continued to increase the charges on their cards and consumers will find they will be stung more severely than ever before.”

“Just like on mortgages, card companies are factoring in a much bigger margin for the risk of consumers defaulting, so rates are going up rather than down.”

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Rewards credit cards:  Amongst the different rewards that are available from credit card companies on these cards are discounts at various retailers, travel rewards, air miles, loyalty or rewards points that can be redeemed for various goods, and more. These are suited to those that spend on their credit cards regularly and repay their balance in full each month.

0% purchase cards: These cards allow cardholders to use the card to make purchases in the normal way but to enjoy a period of interest free credit within which to repay the debt in order to avoid paying any interest at all.

0% balance transfer cards: The way in which these cards work is by enabling you to transfer the balance from other, high interest credit cards onto your new 0% balance transfer credit card. Once the transfer has been made you have a specified 0% interest period within which to clear the outstanding transferred balance before you start getting charged interest. The length of the 0% period can vary from one provider and credit card to another.

Life of balance transfer cards: With the life of balance transfer credit card you transfer your existing higher interest credit card balances in the same way as you would with a 0% balance transfer card, which means that you can transfer debts up to the credit limit in your new card. You will then be charged a very low rate of interest for the life of the transferred balance providing you make at least the minimum repayment each month.

Charity credit cards: For every pound you spend on your credit card the provider will donate a certain amount to the sponsored charity. You can choose from all sorts of charities from cancer support and research charities to animal charities and wildlife preservation.

Credit cards for those with poor credit: There are a couple of main providers that offer credit cards to those with damaged credit, and these are Capital One and Vanquis. You should bear in mind that you will need to meet the lender’s eligibility criteria, and if you are successful the interest rate charged is likely to be very high based on how bad your credit rating is, whilst the borrowing levels are likely to be low in order to stop you from falling into spiralling debt levels.

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With the evolving world of credit cards it is possible to get a card that suits your needs and your circumstances perfectly, and it is important to make sure that you do get the right card to suit your needs, as this can make a big difference to the benefits and the affordability of a credit card. In order to do this you need to look at what the card offers as well as what your spending and repayment habits are like, so that you can match the right card up to your needs.

For example, if you want to use your credit card to make a big purchase and you are looking to spread the repayments then you may find that the most suitable card for your needs is a 0% purchase credit card, as this means that as long as you repay the balance within the lengthy interest free period offered you will not be charged any interest at all. Your spending and repayments habits will play a big part in which card you choose for your needs.

The best method of finding the most suitable credit card is using the Internet, as this will enable you to browse and compare different credit cards from a wide range of providers, so you can look forward to an excellent choice of cards and providers. You can also look the benefits of different cards with ease when you use the Internet, so you will be able to determine which cards sound best suited to your needs and circumstances. You will be able to browse and compare credit cards from the comfort and privacy of your own home and at a time to suit you, and you can even make your applications online and receive an instant decision from the card provider.

You should always make sure that you take your time in looking at the benefits of different credit cards, as otherwise you could end up with a card that is totally unsuited to your needs and results in you paying over the odds. You can choose from many different credit card types, such as rewards base cards, balance transfers cards, 0% purchase cards, charity credit cards, low rate credit cards, cash back credit cards, and more.

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It is therefore important that you think carefully with regards to switching your credit card. There is little point switching cards if you are not going to benefit from the switch, so don’t just apply for another card simply for the sake of it. Do your research and see whether you could make any savings or get a much more competitive rate before you take the plunge. You can check out the different types of credit cards and the rates and fees charged by using the Internet, and this will make it easier to determine whether there is any point in you switching credit cards.

If you are paying a balance off on one or more high interest credit cards then you may find that switching to a 0% balance transfer card or a low rate life of balance transfer card may prove useful, as you can then transfer your combined balances onto the balance transfer card and save some money on interest. If you have a credit card that you pay off in full each month but which offers nothing in the way of benefits then you could ditch that card and go for a rewards based card where you can earn something back from the credit card company.

The matter over whether or not to switch credit card will really depend your needs, circumstances, spending and repayment habits, and what sort of deal you currently have with your credit card. The object of the switch is obviously to save money, or in cases where you are not charged interest, such as if you repay your balance in full each month, to enjoy greater benefits from your credit card. If you have very bad credit then there is a very strong chance that you will not be accepted for another credit card, and you should avoid making haphazard applications because your credit can be further damaged through rejections.

If you are looking to switch your credit card then you should make sure that you research the market and compare a range of cards that will suit your needs. Avoid the temptation to simply take on another card, and then use both the new and the old card, as the point of the process is to replace your existing card with a different, more suitable card and not to add to your existing card with an additional credit card.

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With companies such as Virgin and Capital One offering new customers 15 months interest free deals, other providers are now also looking into alternative methods of inticing new business towards their deals.  The future way to gain new customers would be by cutting the balance transfer fee that has been getting more expensive over that last few years.

Barclaycard were the first to introduce this method by taking their 3% transfer fee down to 2.5% on their OnePulse card and along with this they have maintained a lengthy 14 months 0% interest free period on the balance that has been transfered into the bargain.

Money Experts, Sean Gardner said “With 75% of the market currently offering a 0% deal on balance transfers, however, providers are now looking for new incentives to pull in business, and lower transfer fees are a clear solution.”  He also added ” ‘The best-buy tables have been dominated over the last couple of years by cards offering lengthy 0% balance transfer deals, but there inevitably comes a point when trumping the pack becomes impossible.”

It all seems good news for the consumer, who, in the current climate need to be saving anything they possibly can.  For people who are looking to transfer on a new deal, because their current one has expired and they are now on a high APR%, then the lowering of the transfer fee on the new deal is welcome news.

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