Credit cards Updated:
Before working here, I picked up some Christmas temp work as one of Santa's little helpers in Lapland.
Every year about this time the elves would gather together and, after a few too many candy canes, conversation would inevitably turn to Christmas shopping and how we would pay for it all (Santa ran a tight ship – there was no staff discount, and – to be honest – he only grudgingly paid us the minimum wage).
Most of us, therefore, used credit cards to help spread the cost of Christmas. Comparing credit cards became a favourite topic and this would quickly descend into an argument over who had the best card!
"My card does this"
"Yeah? Well my card does this and this!"
The thing the elves didn't understand was that these features are only good if you use and make the most of them.
So, let's take a look at what credit cards can do for you this Christmas…
"I've got a credit card, and have the money to pay back the balance in full."
Credit cards can be a great, secure way of paying for goods due to the insurance provided under the Consumer Credit Act (under the provisions of the act section 75 the credit card provider and the merchant are equally liable for goods purchased between the values of £100 and £30,000). In contrast to cash, this gives you more protection, and makes a credit card a good option for Christmas present buying – even if you have the cash to buy them outright!
If you already have a credit card you don't generally have to start paying interest on purchases you make for a set period (typically 50-56 days but make sure you check this in your terms and conditions first). This means that you can benefit from the protection of paying by credit card for your larger gifts, without needing to pay any interest!
But to truly make your plastic friend work as hard as possible for you, consider a cashback credit card. You earn money back for all your purchases, still benefit from the protection and again, not pay any interest so long as you pay off your balance in full before the interest free period ends. Check out a card like the American Platinum Cashback Card which earns you 5% cashback on up to £2500 worth of purchases made in the first three months – so a maximum of £125 just for doing your normal Christmas spending!
An interest-free period is not the same as a payment free period. You will still need to make sure you pay the minimum payment each month (setting up a Direct Debit for this purpose will make this easier for you to manage).
"I've got a credit card already and need to spread the cost of Christmas."
If you've already got a credit card and it's out of the introductory bonus period, you can still benefit from the interest-free period on your credit card (as above, this is typically 50-56 days). As we have less than two months to Christmas this means that you could make your Christmas spending on your existing card without having to pay any interest before Christmas.
In order to continue to benefit from paying no interest on your debt, you should consider transferring your balance onto a new credit card. And now is the perfect time to be looking for a 0% balance transfer card!
Applications take time to go through, so you want to make sure that you have your card ready for you to transfer your existing balance onto before you end up having to pay interest on your Christmas purchases. The Barclaycard Platinum 24 month Balance Transfer Visa offers a whopping 2 years 0% balance transfer offer with a fee of 2.80% of the amount transferred.
0% balance transfer cards usually allow you to transfer balances for a set time after you take out the card for you to benefit from the 0% rate. Check the terms and conditions of the card you are applying for to make sure it is suitable. There will also be a fee payable (usually around 3.00% of the balance), but when set against the interest you would have paid on your old card, this still works out very economical.
"I don't have a credit card, but am thinking of getting one to help spread the cost of Christmas, which one should I go for?"
If you are looking for a spending credit card to spread the cost of Christmas, you need to act fast. Application times vary: some can be completed quite quickly, by branch, phone or internet; others can drag on as you may be required to provide additional documentation. And then of course, you have to wait for the new card (and PIN) to land on your doormat. Even with the quickest turnaround, this is likely to take a few days at the very least.
For your Christmas shopping it's best to get the longest 0% purchase card that you can. This will help you spread the cost of Christmas by repaying your debt in instalments, before the introductory offer ends. One of the longest introductory purchase deals on the market at the moment is the Tesco Clubcard Credit Card for Purchases MasterCard, which offers 0% on purchases for a massive 16 months and Tesco Clubcard points for spending on your card!
A good way to make sure your debt is fully repaid is to set up a standing order. Credit card providers are not very forthcoming about whether you can do this so be sure to ask the question. You will need to obtain a sort code, account number and usually a title for the Standing Order (this is normally your credit card number) in order to set this up. Sometimes this is on the back of your credit card statement, but if not, call up your provider to get hold of this information.
Remember that the money you spend on plastic is still money you need to find. A credit card with a big limit is not a licence to shop, and can get you in a whole heap of trouble if you don't stay on top of your spending.
Compare 0% balance transfer credit cards Compare combined 0% balance transfer and purchase cards Search all credit cards
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For more information check out our Guide to 0% Balance Transfer Credit Cards.
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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