If you're facing financial uncertainty, these credit cards could help you sleep a little easier at night.
This article was first sent to readers as a '360 degrees' email.
When I tell people I'm a financial journalist, one question gets asked more than any other: 'How long is the recession going to last?'.
After umming and aahing for a few minutes, I have to admit I don't have a clue. In fact, it seems that even the real economic experts don't know.
Talk of 'green shoots' comes and goes, and various optimistic/pessimistic predictions are made, but really, no one knows just how long the gloom is going to last.
Some economists are predicting Britain will turn the corner mid-2009, while other suspect the country could still be in recession towards the end of 2010.
Mervyn King, the Governor of the Bank of England, has called the current banking crisis 'an extraordinary, almost unimaginable, sequence of events'.
And last week, Chancellor Alistair Darling admitted the economic situation is even worse than he thought it would be. Aargh.
A short-term solution
This is all extremely unhelpful for people trying to plan for the future.
If you're in debt, reducing the amount of interest you pay is one of the main ways you can bring your finances under control.
One way to eliminate interest payments is to shift all your debt onto a 0% balance transfer card, which offers you 0% interest on your debt for a fixed period of time.
My favourite in this department is currently the Virgin Money card. It offers 0% on balances for a substantial 15 months, and also allows you to transfer other debts (like personal loans and overdrafts) onto it as part of the 0% deal.
Don't get caught short
Of course, there are snags. You have to pay a 2.98% transfer fee, the card's typical APR is 16.6%, and perhaps the biggest snag of all is - the 0% deal doesn't last forever.
So - if you're looking for a balance transfer credit card to get you through the whole recession, the 0% option might not be for you.
There's no way of knowing whether the recession will be over in 15 months, and if you can't clear your balance in that time, you'll be left paying high levels of interest at a time when another 0% deal could be hard to come by.
So if you think you might not be able to clear your debt in 15 months, what should you do?
A lifetime alternative
A lifetime balance transfer card could be the way forward. This sort of deal offers you a low rate of interest on balance transfers, for as long as it takes you to clear that balance.
So, no matter how long the recession lasts, your interest payments should remain manageable.
Top picks
My top pick in this category is the Barclaycard Simplicity card, which offers an interest rate of just 6.8% APR for the life of the balance (2.5% transfer fee applies). The 6.8% rate also applies to any new purchase debt.
If that doesn't float your boat, here are some of the other good long-term balance transfer deals on offer:
|
Card |
Rate |
Duration |
Transfer fee |
|
Capital One Low Rate Balance Transfer |
6.9% |
Until Jan 1st 2012 |
0% |
|
Citi Platinum Life of Balance
|
6.9% |
Until balance is cleared |
2.5% |
|
BT Rate for Life
|
6.9% |
Until balance is cleared |
3% |
|
Citi Advantage Gold
|
6.9% |
Until balance is cleared |
3% |
As you can see, 'long-term' doesn't always mean 'lifetime'. For example, Capital One's Low Rate card is good in that it doesn't charge a balance transfer fee.
However, the 6.9% deal lasts well under three years. After that period, you'll pay a typical interest rate of 15.9% APR if you haven't managed to clear your balance.
Don't take your foot off the peddle!
When you've transferred your debt to one of these cards, you might be tempted to relax and take longer to pay it off.
Don't do it! You're still being charged interest (albeit at a lower-than-normal rate) - so the quicker you can clear your balance the better.
If your credit rating lets you down
Unfortunately, most 0% and lifetime balance transfer cards are only available to people whose credit ratings are very good or excellent.
If your credit score isn't up to scratch, trying following these tips to knock it into shape.
And if you're not able to get one of the cards I've mentioned, don't panic. This bumper guide - containing 125 dealing with debt tips - should carry you right through the recession and out the other side!
More: My favourite credit cards | Is this really the best credit card on the market?