Worried how you'll pay for the festive season? Clever use of a 0% card could help you spread the cost of Christmas.
I love this time of year - the weather has started getting colder and I've begun to feel all Christmassy! However, I realise that not everyone shares my sentiment. Chatting to some friends at the weekend revealed that they positively dread the holiday, what with the expense and trauma of buying gifts. And for those in debt, Christmas can create untold stress. On the one hand you're paying off your credit cards as quickly as you can, and on the other you feel obliged to spend a second fortune on presents!
So what's the solution? Well, for a start, if you're struggling to pay off debts on credit cards the first thing you should do is look into transferring your balance to a 0% card. By moving your debt to one of these cards you can effectively give yourself some breathing space to pay it off. Most of the 0% cards currently on the market offer an interest free period of five months or more, during which time, as long as you ensure you make the minimum payments, you will not be charged interest. However, take the interest-free period seriously and try to have paid off your debt before it expires.
Top deal of the moment as listed by Moneyfacts is the Halifax One card, offering 0% for a whopping twelve months, closely followed by the HSBC, Sonycard and Virgin Money card, each offering 0% for nine months. All of these cards (except HSBC) have a two per cent balance transfer fee (max. £50). You can apply for Halifax and Virgin in our card centre.
Then of course it comes to extra spending. It's all very well switching to a 0% balance transfer card and throwing money at your debt if you end up having to spend a small fortune on Christmas presents - you'll soon find yourself back at square one! If you feel comfortable doing so, consider telling friends and family that you are in the process of clearing debts and mention that, for this year at least you'd prefer not to receive/buy presents. Alternatively, suggest that you all save some cash by only buying gifts for the children. However, if these suggestions seem unlikely to work, why not consider making gifts where possible, instead? If you really don't think you can get out of buying presents, work out a budget and stick to it.
One way to at least spread the expense is to use a 0% card for new purchases. The Sainsbury's Bank Visa card currently tops the Moneyfacts Best Buy table, offering 0% on new spending for ten months, closely followed by the HSBC and Nationwide BS credit cards, both offering 0% for nine months. This means you could buy your Christmas gifts now and effectively pay them off interest free next year, helping you avoid getting in further debt. Again, ensure you make the minimum payment each month or you will incur charges - the easiest way to do this is by setting up the automated direct debit option.
Of course, taking out two cards would be a bit of a nuisance. Luckily, there are cards offering the best of both worlds. The HSBC card and the Morgan Stanley Gold cards both offer 0% on both balance transfers and new purchases, for nine and six months, respectively.
Finally, don't forget when taking out a 0% credit card, either for balance transfers or new spending that it's not free money. That balance will have to be paid off and the Foolish will make sure this is done as quickly as possible, incurring little or no interest on the way. So try to clear that debt before the interest free period is up! Additionally, credit card limits there to limit spending - they're not set as a challenge to be met. Keep your borrowing down; pay off balances as quickly as possible and aim to start the New Year in as little debt as possible!
You can apply for the Halifax One, Virgin, Nationwide BS and Morgan Stanley Gold card and search for plenty more in our new look, Credit Card Centre.
