Cut thousands off your credit card debts!

Fancy a permanently low interest rate on your credit card? Look no further...

Credit cards are wonderful pieces of plastic aren't they? Very handy for paying for holidays, home improvements, a new car, weddings, that sort of thing.

But if your credit card spends a lot more time outside your wallet than in it, you're likely to be dealing with a fairly hefty credit card bill.

Sound familiar? The good news is, there's an easy way to cut that bill - permanently.

The trouble with 0%

Here at lovemoney.com, we've always said a great solution to credit card debt is to shift it all onto a 0% balance transfer credit card. After all, this will allow you to escape paying interest on your debt for several months, giving you a bit of breathing space. Both the Virgin Credit Card and the Abbey Credit Card, for example, currently offer a 0% deal for 15 months - which is the longest interest-free period available on the market today.

Now, there's no denying this deal is great while it lasts. But what happens when those 15 months are up? The 0% period will end - and what if you still haven't managed to pay off the debt?  If you stick with the either credit card, you'll be hit with a chunky interest rate of around 16%.

So your best bet at that point would be to move the debt to yet another 0% balance transfer credit card.

But that's going to involve a lot of organisation - after all, you'll need to remember exactly when you need to switch and apply for a new card. And let's face it, continually shifting debts from one 0% card to the next is a bit of a drag.

The never ending deal

There is another solution, however - a lifetime balance transfer credit card.

These nifty little pieces of plastic offer you an affordable rate of interest that will last until the entire debt has been paid off. So this means you won't have the hassle of constantly remembering to apply for a new card as soon as your deal expires - because your deal won't expire until you've got rid of your debt!

The chart below shows the top five long-term balance transfer credit cards:

It's pretty clear that the Barclaycard Simplicity card knocks the socks off the competition in terms of the rate it offers. And it doesn't even charge a transfer fee! However, as always, there's a catch - this rate is variable, so you'll need to keep an eye on it to check it doesn't change.

What's more, to get this low rate, the maximum amount you can usually transfer to this card is £5,000. You can request a larger amount, but if this is approved, the interest rate on the balance above £5,000 will be charged at the slightly higher rate of 6.9%.

You'll also need to ensure you move your debt across to the Barclaycard Simplicity card within 60 days of your account opening date. In comparison, all the other cards in the table allow you up to 90 days.

The Citi Platinum Life of Balance card and the Citi/AAdvantage Gold card also offer attractive deals at 6.9%. But they also charge a transfer fee - not so good.

It's worth noting that if you're planning to use either of the Citi cards, don't use them for spending - otherwise you'll be hit with an interest rate of 16.9% for the Platinum card and 18.9% for the AAdvantage Gold card. (Unless you pay off the bill in full each month, of course.)

What's more, the Citi/AAdvantage Gold card has the cheek to charge an annual fee of £25 after the first year. Eek!

On the other hand, both the Natwest Classic Credit Card and the Royal Bank of Scotland Classic MasterCard are fee free and offer a great interest rate of 8.9%.

And if you're planning to do any spending on these two cards, you'll receive the same lusciously low rate for the first nine months. Just make sure you can pay off the bill in full before the nine months is up - otherwise you'll be hit with a hefty interest rate of 16.9%.

Take interest in your interest

Because the amount of interest on a lifetime balance transfer credit card is much lower than your average credit card, you'll save a lot of money in interest, and also pay off the debt quicker.

Say, for example, you transferred £5,000 of debt onto the Barclaycard Simplicity card and paid off £100 per month. In total, it would take you 59 months (nearly five years) to clear the debt and cost you £900 in interest.

However, if you used a credit card charging a rate of 16.9%, it would take you a whopping 88 months (more than seven years) to pay off the debt - and cost you a massive £3,800 in interest!

So by choosing the Barclaycard Simplicity credit card, you'd not only save yourself a total of £2,900, but you'd also pay off the debt nearly two and a half years earlier. I think that's pretty impressive, don't you?

And don't forget, if you can afford to pay off more than the minimum monthly repayment (MMR), you'll save even more!

So if you've got a mammoth sized credit card bill heading your way, don't let your interest rate get you down - switch to a better credit card today!

Compare credit cards with lovemoney.com

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