Cut Your Interest Bill By 10%

If you want a guaranteed low interest rate for life on your credit card balance, take at look at these great deals.

Last week I talked about the best 0% balance transfer credit card in town as part of our 'The Good, The Bad And The Ugly' campaign. Today I want to look at another 'good' product: the lifetime balance transfer credit card.

0% balance transfer credit cards are uber Foolish because they enable you to chip away at your debt without racking up a single penny in interest for the duration of the 0% period. This interest-free window can last as long as 15 months if you go for the Virgin Credit Card.

But as generous as 15 months is, for some of us that simply isn't going to be long enough. Of course, there's an opportunity to transfer your remaining balance to a new 0% deal. But switching cards once, or even twice a year can be a hassle and you'll almost certainly incur transfer fees each time.

Worst still, who can say whether you'll still be eligible for a competitive card when the time comes if the impact of the credit crunch has a lasting effect?

One alternative is to go for a lifetime balance transfer credit card instead. This type of card allows you to transfer your balance from another card and pay interest at a fixed rate until it is completely repaid. Sound good to you?

What's more, the interest rate you'll pay is very competitive, and you'll have the peace of mind that comes with knowing exactly where you stand with the cost of your credit card debt.

True, there aren't masses of these cards available but the best ones offer some really great deals. There are two cards I particularly like: the Citi Platinum MasterCard with iTunes Rewards and Citi Platinum Mastercard Credit Card.

Why are they so good?

The Citi Platinum Mastercard Credit Card charges an APR of just 5.8% for as long as it takes you to clear your balance. Even better, there's no transfer fee which is getting pretty rare in the balance transfer market these days.

Since credit cards charge an average interest rate of 15% or 16% you could easily cut your APR by around 10%. Moreover, Citi's impressive lifetime interest rates are even lower than many mortgage deals and personal loans. Now that can't be bad!

The iTunes version of the Citi Platinum card charges an even lower rate of 4.9% and offers the prospect of iTunes reward points on all your purchases.

Are there any drawbacks?

Well, the iTunes card charges a 3% balance transfer fee unlike the 'non-iTunes' Citi Platinum card.

Also if you're tempted to build up some iTunes reward points, bear in mind that you will end up paying 16.9% interest on any purchases on the card until you've completely paid off your balance transfer. That's due to negative payment hierarchy. In other words, any payments you make to Citi on this card will go towards your balance transfer debt first.

Perhaps the best solution is to have one credit card for your purchases and another for your balance transfer. Take a look at our selection of 0% on purchases credit card including the Halifax One Credit Card.

When life doesn't mean life

The Goldfish Credit Card is also an attractive card in many ways. You'll only have to pay 4.9% interest on your debt, subject to a 3% fee. The downside is that it's not a true lifetime deal. Instead the low interest rate deal will only last until February 2011.

There are several other 'lifetime' deals out there that aren't truly for life. Still, if you think you can pay off your debt by February 2011, or switch to another card at that stage, the Goldfish card has its attractions.

Overall I like genuine lifetime balance transfer cards the most. They're a great way of managing your credit card debt even if you do need to be disciplined. Because there's no deadline with this type of credit card - unlike a 0% balance transfer card - you may be in no particular hurry to clear your balance. But don't forget, the longer you take to repay the debt, the more interest you'll pay, so try your best to get rid as soon as you can.

Find a competitive lifetime balance transfer credit card at The Motley Fool Credit Card Centre.