Be smart with your credit cards this Christmas

October 9, 2006

I realise we are not even half way through October yet, but there really isn’t a better time to start planning your finances for the run up to the Christmas spending splurge you will no doubt make.

Many retailers are already setting up for Christmas so why not you. In January this year two consumer debt help-lines, the Citizens Advice Bureau and The Consumer Credit Counselling Service, had a record number of calls from consumers asking for help and advice when they discovered they had overspent on the run up to Christmas.

Plan spending

It pays to set a Christmas spending budget and stick to it, however, there are more ways you can improve your finances this Christmas by seeking out credit cards that offer 0 per cent introductory deals on making purchases and if holding an outstanding balance on a credit card is not your thing, there are also credit cards that offer cash back on everything you spend.

Credit cards with 0% on purchases

How about this for an option, all the gifts you buy using your credit card will not have to be paid until the same time next year and there is no interest! With a GE Money Transformation card you receive an introductory deal of 0% on all purchases for 12 months. The bonus of this type of deal is that if you already had the cash to make these purchases you can stick the money into an interest bearing account until the credit card balance needs paid in up to a years time.

Even if you didn’t have the money right now you can still save by using the card to make your Christmas purchases, calculate how much your monthly payments to clear your balance will be till the introductory offer expires, budget and save for this monthly cost and only pay the minimum requirement each month then put the difference between your monthly cost and minimum payment into an interest bearing account. After the 12 month introductory offer expires the standard variable APR reverts to 12.9%

Other credit cards that are certainly worth mentioning include the Sainsbury’s Bank offering at 10 months 0% on all purchases with a standard APR of 15.9%, Marks & Spencer &More Card with 0% on all purchases for the first 12 months at a standard APR of 16.9%.

Cashback credit cards

If the above seems too much hassle or you are not interested in having an outstanding balance on your credit card you would be wise to consider a credit card with a cash back offer. Currently one of the best deals on offer are from Morgan Stanley with their Platinum credit card giving a cash back of up to 3% on all purchases until February 1st 2007 and then 1% thereafter. Please note standard APR is currently 15.9%. American Express has matched the deal from Morgan Stanley by using their version of a Platinum card. Giving 3% cash back on all purchases for the first 3 months of the account opening and then 1.5% thereafter the Amex Platinum follows up with a standard APR of just 14.9%.

Be smart and draw up a gift list with a budget, work out which credit card you would like to use and have a wonderful Christmas