Christmas can be a wonderful time of year but it can also be expensive and all that extra spending tends to hit you right where it hurts – your credit card balance.
There’s the cost of the presents, the decorations, the tree, filling the fridge with food and drink, travelling to see family and friends and the inevitable after-work celebrations. And of course there’s the dreaded New Year’s Eve…
But, whatever you do, don’t let high credit card interest rates add to the cost of the season. Use one of our two money saving methods and make your festive spending less damaging to your finances. Which method is best for you will depend on whether you pay off your credit card bill in full each month.
Card saver #1: Get paid to spend with the Amex Platinum cashback credit card
If you pay your credit card bill off each month then why not get some cashback on that Christmas extravagance? The Amex Platinum cashback credit card gives 5% annual cashback on anything you buy in the first three months after applying for the card.
You can earn up to £200 cashback at the top 5% rate. This means that you could spend your way through £4,000 - or £1,333 a month - and earn 5% cashback on every penny. Not bad if you are considering a New Year break in the sun!
The Amex Platinum card offers the highest introductory rate of cashback on the market. We recommend that you apply for and use the card specifically for a major spending spree to make maximum use of that special 5% cashback rate.
But make sure that you are able to pay your monthly balances off in full as the Amex Platinum cashback credit card has a typical APR of 18.9%. Interest charged at that rate will wipe out the gain from your cashback.
Use our comparison table to find other reward cards
Card saver #2: Get a 0% credit card and pay it off in the New Year
If you aren’t able to pay your credit card balance off in full at the end of the month then you can still avoid paying high interest rates on your spending with a 0% credit card.
If you are quick you will be able to apply for a cheap card like the Virgin credit card before Christmas. You can then stick all your festive spending on the card and, provided you make the minimum payment, you won’t pay a penny in interest for six months.
Applying now for a 0% credit card for your Xmas spending instead of using a card with a standard APR of 18.9% could save you £189 in interest over the course of 2009 (assuming a £1,000 spend).
If you are really smart you can pay off your Virgin card balance during the six months of 0% credit by setting up your direct debit to make the minimum payment and then making a manual payment through Virgin’s online payment system each month. You only need to raise your monthly repayment to £166 in total and after six payments your Christmas spending of £1,000 will be completely paid off and it won’t have cost you a penny in interest.
use our 0% credit card comparison table to find other cheap cards
NB: Always make sure that you set up a direct debit to meet your minimum credit card payment each month. You should also always check to ensure that your direct debit will be active in time to make your first payment; if it won’t be then make a manual payment by cheque or bank transfer.
