A Credit Card For Christmas

Every year the build up to Christmas seems to start earlier, advertising appears in the shops urging us to start shopping soon, decorations go up and before you know every store you walk into is playing Jingle Bells! However when it comes to financial planning some experts are saying its advisable to start Christmas planning early. Particularly if you plan to pay for your Christmas shopping with plastic and take advantage of some of the special offers that may be available on credit cards over the festive period.

There are 36 credit card providers who offer a 0% introductory interest rate on purchases that smart consumers could use to their advantage in spreading the cost of Christmas shopping without incurring large interest charges.

It’s certainly true that we spend a lot on plastic in the run up to Christmas, last year a total of £22 billion was spent on credit cards. It’s anticipated that this figure could rise higher and if you are using a credit card with a high APR that could up making Christmas cost even more than you anticipate.

The idea of taking a zero percent interest rate card and repaying it before the introductory offer is expired is a good one that allows you to spread the cost of your shopping but as with all financial products its worthwhile spending some time investigating to find the best deal for you.

This is perhaps why moneysupermarket.com advise getting at least this part of your Christmas shopping out of the way early especially as research from Sainsbury’s Bank indicate that last year one in five consumers were not able to clear their festive bills by the end of January. Therefore having the security of an interest free period would be worthwhile for some consumers at least.

However it isn’t simply a buy now pay later attitude to Christmas shopping which benefits from using a credit card to pay for your Christmas shopping. Many consumers choose to shop online now, it’s convenient, can be done at any time and price comparison can be made much more easily than trudging from shop to shop. Not only are credit cards a convenient way to pay for goods online, they often offer additional security for the consumer which makes them an attractive prospect when busy consumers do a lot of Christmas shopping online.

You can even take advantage of reward schemes that are becoming popular with more and more credit card users. Amazon.co.uk now have their own credit card, which awards points when you shop at Amazon and offers introductory points on your first purchase equivalent to £15. Their credit card is also interest free on balances and transfers for the first six months.

As always with credit cards its important to chose one that’s right for your circumstances. If using a credit card to spread the cost of Christmas rather than as consolidation of an existing balance its important to try and get a card that doesn’t charge interest on purchases rather than one that is interest free on balances. The second option will often cost a lot more for any additional debt through purchases.

Reading the small print and ensuring you know when the interest free period ends and how much you will be charged in interest after that is essential. If you can’t clear the balance before the interest free period is finished and the APR is too high it could be worth considering switching cards so your not paying more than you should which is likely to lead to the balance taking longer to clear. As always, using a credit card needs to be responsible, 168,000 of the people questioned by Sainsbury’s Bank didn’t think they would be able to clear their credit card balance for over a year. This isn’t likely to be a good state of affairs when next Christmas comes.