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THERE'S no credit card deal, for our money, as rewarding as a balance transfer.

Forget cash back and loyalty points these worker bees of the credit card world offer something much more valuable: the opportunity to pay off high-interest credit card debts.

It's not charity, by any means. Credit card providers have your long-term business to gain when you move a debt to one of their credit cards and they'll also benefit in the short-term by taking a fee and, in the case of life of balance transfer credit cards, monthly interest payments.

Even so, used correctly, both 0% and life of balance transfers are some of the best debt-beating tools we have.

This guide will go through three strategies for comparing 0% and low-interest balance transfers. First, though, what exactly are the differences between the deals?

What's the difference?

The two types of balance transfer - life and 0% - are more similar than most people realise.

Both allow people to move a sum of money to a new provider and the deals they offer on the transferred debt are very much dependent on meeting the standard card conditions, offers can be withdrawn if a minimum payment is missed, for example.

Their most significant differences are as follows:

0% balance transfers:

• Interest-free for a set initial period, sometimes up to two years.
• At the end of the 0% period standard interest rates apply.
• Charge a fee (usually around 3%) to move the balance.
• Are heavily promoted and rarely offered by providers to their existing customers.

Life of balance transfers:

• Offer a low interest rate which lasts until the transferred balance is cleared in full.
• Charge a lower fee (usually around 1.5%) to move the balance or no fee at all.
• Are less well-known and often available from existing financial providers as well as by taking out an advertised credit card.

This run down between the two is generally as far as most people get. 'No interest is better than some interest' they say, and jump off to compare the credit card market's most competitive deals.

We think that's sometimes a mistake, though.

Life of balance transfer credit cards aren't always the answer but they're far more useful, and better value, than they're often portrayed to be.

We hope the following three new ways of looking at balance transfers will show that.

1. Compare real costs, not just deals

0% balance transfer credit cards now charge a hefty fee for cardholders to move a balance to their promotional rate.

We tend to think of this as a simple lump sum, which makes it a lot more attractive than an interest rate where it's not clear how much, exactly, you'll end up paying.

Instead of thinking of the fee as a lump sum, then, try to think what the equivalent would be if that fee was expressed as an interest rate.

For example:

0% period	6 months	9 months	12 months
2% balance transfer fee	7% p.a	4.9% p.a	3.7% p.a
3% balance transfer fee	10.7% p.a	7.4% p.a	5.6% p.a

These calculations assume an initial transfer of £1,000 and then equal monthly repayments to repay during the 0% period.

As you can see, even over a fairly long period a high balance transfer fee can be as expensive as a lower rate card that doesn't charge a fee for moving the balance.

The flip-side of comparing the real cost of these deals is that the 0% rate, as long as you're accepted for it, will definitely be 0%.

Life of balance transfer credit card rates, on the other hand, are representative rates only: under law, lenders are only obliged to offer those rates to 51% of those that apply so your actual rate could be higher than the advertised APR.

Under the lending code, credit card providers cannot increase this rate in the first 12 months. If they increase it subsequently, you have the right to reject the rate increase.

2. Consider your whole budget

Another useful way to think of balance transfers is to consider the options in the context of your whole budget.

If you have a number of high priority debts (mortgage payments, fixed loan payments) or other unavoidable outgoings that can cause financial strain adding a 0% balance transfer deal, which you should always try to pay off in the 0% period, is another strain again.

On the other hand, if you know the restriction of a limited period during which the debt must be repaid in full would help motivate you to make regular payments and ultimately clear the balance you should take that into account.

Remember that the balance transfer is a tool to eliminate your debts.

The ultimate goal should always be to reduce financial strain and, for that to happen, you need to be realistic about the amount you can afford to repay.

Credit card tarts: a dying breed

You'll notice that we haven't yet mentioned the possibility of what has traditionally been a third way between 0% balance transfer and life of balance transfer credit cards: moving to a 0% deal and moving again at the end of the introductory period.

In today's credit environment, see point three below, we feel this strategy is now too risky for all but a few credit cardholders with outstanding credit histories.

The chance of rejection is now very high and, at that point, cardholders would be left repaying their debt at a very high interest rate until, and if, they could find another 0% deal.

3. Consider application criteria carefully
and check for existing customer deals

Finally, application criteria should be no small consideration when you're deciding between a 0% and life of balance transfer credit card.

Credit card providers are still very cautious about the applications they'll accept.

Those with poor credit scores or who are fairly new to credit are especially vulnerable and the balance transfer market is a particularly tough nut to crack.

uSwitch research from 2009, for example, found that 57% of balance transfer credit card applications were rejected. That was the highest proportion of any card type.

The longest 0% balance transfer offers can afford to be particularly picky about who they accept: one particularly heavily advertised 2011 deal was said to accept less than 40% of its applicants.

It's not the case that life of balance transfer credit cards are necessarily easier to apply for, just that comparing the benefits of a long 0% deal and a low interest rate is often misleading.

Instead, compare a 0% deal you feel confident that you could be accepted for with a life of balance transfer deal that is also achievable.

That will give you a much better idea of the savings you could make on your current debt.

You can find full application criteria in all of our credit card reviews and additionally always check the provider's website or the actual application form before applying.

Existing customer deals

As well as considering advertised 0% balance transfer and life of balance transfer deals, it's worth noting that it's possible to negotiate a rate with a financial institution with which you have an existing connection.

You could approach your current credit card provider or speak to a long-term current account or savings provider which also offers credit card deals.

Existing customer balance transfers are fast becoming a popular and, in some cases even institutionalised, way of refinancing a debt to save money on interest repayments and, ultimately, clear the borrowing altogether.

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