There are as many different types and styles of credit cards as there are financial institutions. The different types may be more suitable to one situation than another. A Rate for Life credit card can be a useful tool for helping to get debt under control by fixing a flat rate to the transferred balance.
* What is Rate for Life?
The premise is simple though the name can be interpreted differently. Rate for Life specifically refers to the life of a transferred balance to the card. Different providers will offer a low interest rate on the transferred balance but have a normalized APR for additional purchases made on the card. This low interest rate usually only applies on transfers made within a specified amount of time after the card is approved and until the transfer balance is paid off.
* Example:
Rate for Life Credit Card A offers a 5.9% interest rate on all money and balance transfers made to it within the first 90 days of acceptance with a 1.5% handling fee. Credit Card A features an APR of 16.9%. No matter what other purchases are made on the card, the original transfers will only be billed at 5.9% interest rate. Any additional purchases with Credit Card A will fall under the 16.9% APR and be subject to possible fluctuation of the rate.
* What kind of duration can I look forward to?
Unlike an APR that can fluctuate, a Rate for Life will not. The fixed rate will stay in effect for the duration specified by the card provider. This will differ between providers. Some companies offer a zero percent rate for transfers for 12-15 months that will convert to standard charge rates at the end of the grace period. Other cards will offer a low Rate for Life for the lifetime of the transfer balances no matter the duration. It simply depends on the card and provider.
* Example:
Credit Card A offers a consumer a 5.9% Rate for Life on balance or money transfers made within 60 days of establishing the account. That initial transfer balance will always enjoy that rate until it is paid off or switched from that particular card.
Credit Card B offers a consumer a 0% Rate for Life on balance or money transfers made within 60 days of establishing the account. After 15 months, this rate will convert to the standard APR of the card. Any additional charges on the card other than the grace period transfers will be at the regular APR.
* Can a Rate for Life credit card help me reduce debts?
There is no clear cut answer to that question. It will largely depend on your own personal circumstances and what you currently owe. A Rate for Life card can be an excellent way to get large debts locked into a good interest rate for future repayment. One will need to sit down and do the math behind their current payments and what they will be agreeing to. It should also be noted that many providers charge a small percentage of the balance being transferred as a handling fee. This fee should also be figured into the final calculations of the transfer cost.
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