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Festive spend on the up – so be credit conscious

Festive spend on the up – so be credit conscious

Category: Credit cards

Updated: 13/12/2013
First Published: 13/12/2013

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 It is now over 6 months old so the content may be out of date.

A lot of surveys have been released over the last few weeks revealing just how much Brits are planning to spend on Christmas this year, with the latest estimate from American Express coming in at an impressive £904. But, that doesn't mean consumers won't be looking for ways to save some cash, with 27% of those surveyed planning to keep their festive spending in check by actually cutting their budget.

Key ways to keep costs under control are said to be putting a spending cap on present buying (a tactic employed by 33% of respondents), making the most of retailer offers and discounts (31%), shopping around for the best deals and even restricting present buying to children and not adults, whilst a further 52% will use credit card rewards or retailer loyalty points to help keep their costs down.

But, that doesn't mean the nation will rein things in too much. In fact, the Payments Council predicts that total consumer spending will reach a whopping £82.7 billion this festive season, an increase of 1.2% on last year (which came in at £81.7bn). It seems that online shopping is on the rise too with 12% of all consumer spending expected to be conducted online – or some £10 billion, up from £8.68 billion in December 2012 – whilst spending on credit cards will amount to £14.1 billion.

That means turning to credit will be a tactic employed by a lot of people over the Christmas period, and if managed carefully it can be a great way to help spread the cost. So, if you're planning on using the plastic to fund this year's festive spend, we've put together a few tips to ensure you stay credit-conscious and can keep on top of your budget (and your credit score).

  1. Make all regular payments on time, thereby showing you can effectively manage your credit commitments to improve your credit worthiness to lenders. You could even consider setting up direct debits to cover at least the minimum payment every month to help you stay on top of things.
  2. Try to pay more than the minimum amount each month. Doing so will not only mean you'll be free from debt sooner but it'll reduce the amount of interest added to your bill too, as only ever paying the minimum means you'll spend far more in the long run.
  3. Avoid withdrawing cash on your credit cards. This would indicate to a lender that you're in financial difficulty, and most cards charge incredibly high interest rates (not to mention withdrawal fees) for cash advances.
  4. Keep an eye on how much credit you use and how much you've got available. Try not to max out your cards – and ideally stick to using just 25% of available credit – and if you've successfully paid off cards and have a large amount of unused credit at your disposal it's worth closing a couple of accounts to show responsibility and proper credit management.
  5. Make current debt cheaper. If you've already got a credit balance it's worth transferring the amount to a 0% balance transfer card, ensuring you can pay off the outstanding sum in a manageable amount of time without racking up additional interest (and therefore debt).
  6. Make your plastic work harder. Using cashback credit cards would be a great option at this time of year, as it essentially means you're getting money back when you buy all those Christmas presents. Those that offer rewards or loyalty points could come in handy too – points could even be saved up to cut the cost of next year's spend – or consider opting for a card that offers 0% interest on purchases to keep debt to a minimum.

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