Credit Cards For The Disorganised

If organisation isn't one of your strengths, and you have some credit card debt, a lifetime balance transfer card might be just the right thing for you.

This article was first sent to Fools as part of The Good, The Bad and The Ugly email campaign.

I've written several times (link) about 0% Balance Transfer Credit Cards over the last year. But for some Fools, a different type of credit card could be a better bet.

For many people, 0% balance transfer cards are great. If you have some credit card debt, you can transfer it to a new card, and then you'll have a 0% period (typically for 10 to 15 months) when you can pay down your debt without having to worry about interest payments.

This is fine but there is a potential problem. You may not be able to pay down all of your debt during the 0% period. So when the 0% period ends, you'll have to find a new card and transfer your debt to that. And you'll almost certainly have to pay a fee, perhaps 3%.

What's more, you'll have to be organised or you could be caught out. If you don't keep your eye on the ball, you might not transfer your debt quickly enough and find yourself forking out interest payments for a couple of months on your original card. Organisation is crucial if you want to be a successful card tart.

Credit crunch

Which leads me to the financial crisis. It's not often these days that I get to the sixth paragraph of an article before I mention the financial crisis/credit crunch, but I've got to mention it now. Sadly, the crunch may make an impact on the credit card market before too long.

We all know that many banks are struggling to raise enough finance to fund their loans. Sadly, that may mean that credit card companies become more reluctant to provide what are effectively loans to credit card customers.

Just because you can obtain a 0% balance transfer card now, you can't be sure that you'll be able to get one in a year's time.

An alternative

So for many people, I think it makes sense to look at a different type of balance transfer card - the lifetime balance transfer card.

On the downside, these cards don't normally offer 0% rates, but the big plus is that you can keep your debt on the credit card for, well, a lifetime. Of course, I wouldn't recommend Fools to keep the debt for quite that long. It makes sense to pay off the debt and not pay any interest at all.

But for those of us who aren't mega-organised, a lifetime card allows you to pay off your debt at your own pace and not get caught out because a 0% period has ended.

Which cards?

I like three lifetime balance cards. The first two are from Citibank. It offers a Citi Platinum iTunes Rewards card where the balance transfer rate is an attractively low 4.9%, but you'll have to pay a fee of 4.9%.

Citi also operates the Citi Platinum Life of Balance MasterCard. It charges 5.8% on balance transfers but you'll have to pay a 2.5% fee when you make the transfer.

My final favourite is the Barclaycard Platinum Long Term Balance Transfer card. It has a higher interest rate than the Citi cards -- 6.3%. However, you won't have to pay any balance transfer fee unlike the Citi cards.

So if you think you could clear your debt by making regular monthly payments over, say, three years, go for the Barclaycard. Sure, you'll be paying a higher interest rate on the debt, but not paying a fee will make a big difference. (Read this article to find out more about the potential impact of balance transfer fees on your debt.)

But if you think your debt might really last for a lifetime, go for the Citi iTunes card and benefit from the lower interest rate.

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