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Will you use credit to pay for Christmas?

Will you use credit to pay for Christmas?

Category: Credit cards

Updated: 25/11/2014
First Published: 25/11/2014

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

Have you started your Christmas shopping yet? If not, it could be time to get cracking. The big day is now only a month away – a pretty scary thought – which means you'll want to start ticking people off that list. But, there's one more thing you'll need to consider, and that's how you'll pay for it.

A growing number of people are turning to credit to cover their festive spend, and it seems that men are the biggest culprits. According to research from Topcashback, a quarter of men surveyed admitted to putting the cost of Christmas on credit cards compared with 15% of women, but happily, over half of respondents have set themselves a budget – which should mean their festive spending doesn't get out of hand.

Ideally, you'll have been saving up throughout the year so the festive bill doesn't come as such a shock, but if you haven't started yet, you're cutting it a bit fine! Many will use their November paycheque to cover the cost – a quarter of men surveyed planned to do just that – but with the average Christmas spend set to be £341 this year, you may need a bit of extra financial input.

Use credit – but use it wisely

If you must use credit to help cover your festive spending this year, make sure to use it wisely. There'd be nothing worse than suffering from a financial hangover well into the New Year, and although credit can be a great way to spread the cost, get it wrong and you'll be spending far more than you need to.

So, how can you make sure you keep your credit card spending in check? Well, the first thing you should do is utilise 0% deals. This will allow you to spread the cost without paying huge amounts of interest, so using a card that offers 0% on purchases would be ideal.

Some offer interest-free periods of up to 20 months, so if you used it for your Christmas shop, then stopped spending and focused on making suitable repayments, you'd have plenty of time to clear the balance without adding interest to the bill.

Alternatively, if you've already racked up a hefty bill, consider transferring the balance to a card that offers 0% on balance transfers for the same benefits.

Another thing you can do is take advantage of rewards. These days a lot of credit cards come with rewards of some kind, allowing you to get something back with every single spend. Cashback credit cards are proving to be particularly popular, and there'd be nothing better than getting a nice wad of cash back in your pocket after all the festive fun has come to an end.

You could even be truly savvy and use a combination of the above methods – you could use a reward card to make your purchases, then transfer the balance to a 0% card after Christmas for double the benefits. Of course, this will only be suitable for those who are truly organised and have a good credit rating, otherwise you may find you're not able to benefit from the 0% offering.

One final thing you absolutely must do if you want to make the most of credit this Christmas – make sure to have a plan of how you'll pay it off. If you'll be using interest-free periods then work out how much you'll need to repay each month to ensure the balance is cleared before the introductory period comes to an end, or if you'll be using reward cards alone, make sure you'll be able to pay the balance off with your New Year paycheque.

The key to using credit is making sure you're not paying more interest than you need to, so if you go about it wisely, you can cover your festive spend without suffering for it in 2015.

What next?

How to improve your credit score

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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