Lifetime Balance Transfers Or Personal Loans

Lifetime Balance Transfers or​ Personal Loans?
With card providers' profits suffering at​ the​ hands of​ rate tarts and rising bad debts,​ consumers will find the​ long-term 0% balance deals free from fees becoming few and far between as​ providers look for alternative means to​ recoup their losses .​
Lisa Taylor,​ analyst from moneyfacts.co.uk comments on​ the​ competitiveness of​ the​ growing trend for providers to​ issue lifetime balance transfer deals.
Lenders are struggling with the​ aftermath of​ offering the​ very attractive 0% deals which were used to​ increase their market share in​ an​ extremely competitive market .​
The nature of​ the​ card market has resulted in​ their actions having a​ negative impact on​ their own profits.
This combined with the​ rising bad debts,​ as​ consumers struggle to​ repay their balances in​ the​ 'live for today culture' sees providers resorting to​ alternative methods to​ recoup their losses .​
Examples seen over the​ past few months include,​ adding fees to​ balance transfer deals,​ uncapping balance transfer fees,​ withdrawing incentives and shortening introductory rates.
However,​ this has lead to​ the​ birth of​ lifetime balance transfer deals,​ providing a​ competitive longer term deal,​ which offers a​ good deal for the​ consumer without being a​ 'loss maker' for the​ card industry .​
With rates to​ be found at​ 0.7% lower than the​ 'best buy' personal loan rate,​ it​ is​ worth consumers considering these card deals as​ an​ alternative to​ refinancing using a​ personal loan.
Consumers looking for a​ home for their credit card debt for the​ shorter term can still find some competitive 0% deals,​ offering a​ maximum 12 months’ 0% interest,​ but most now come attached with a​ balance transfer fee,​ commonly 2% with a​ maximum of​ £50.
In the​ longer term consumers can find themselves chasing their tails to​ find these deals,​ after doing the​ rounds of​ the​ market .​
With many of​ the​ lifetime balance transfer deals being fee free they may provide a​ competitive,​ hassle free alternative.
Although the​ lifetime balance transfer rates can be cheaper,​ it​ does require the​ consumer to​ be strict,​ making fixed repayments on​ a​ similar basis as​ a​ loan to​ make any benefit from the​ lower rates .​
At some stage consumers need to​ look at​ a​ structured repayment solution,​ so why not do it​ while the​ good rates are available?
The added flexibility of​ repayments may also be an​ attractive feature to​ many consumers,​ making overpayments without penalty,​ reducing their balance to​ a​ rate comfortable for them and at​ the​ same time lowering their interest liability .​
And in​ times when money is​ tight,​ repayments can be reduced to​ lower monthly expenditure,​ allowing consumers to​ manage their monthly budget.
Obviously there are other considerations to​ take into account,​ for example the​ comparative costs of​ payment protection and also the​ size of​ the​ debt .​
However it​ does lead to​ the​ question whether the​ competitiveness of​ these balance transfer deals will see them being ‘sold out’ in​ their current state before too long.
Lifetime Balance Transfers Or Personal Loans Lifetime Balance Transfers Or Personal Loans Reviewed by Henda Yesti on August 09, 2018 Rating: 5

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