Christmas is a time of giving and we all know how easy it can be to get carried away with holiday spending. That time of year can also be stacked with a load of other financial demands too, such as paying your holiday deposit, paying for more petrol than usual, and even grabbing great deals in the post-Christmas sales. Credit cards are a convenient way to pay for Christmas purchases, but it’s important not to spend beyond your means, and to keep up with your card repayments to avoid fees. Here are some tips for keeping your credit card debt under control over the festive season.
Pay your credit card bill
This sounds like a no-brainer but it’s easy to forget about your bills over the holidays. You could set up a direct debit to pay your credit card, even if it’s only for two months. Or sign up with your bank’s text reminder service. Also, it’s best to pay off more than the minimum amount, especially if your card’s interest rate is high. Minimum amounts are set to clear your interest rate but not much more.
Make your existing debts cheaper
You’re on holiday, but how about using that time to re-organise your debts. It will be worth the peace of mind. If you have a large balance on a credit card with a high interest rate, one option is a balance transfer deal where you transfer your credit card balance to another bank which is offering a lower interest rate. For a big debt, transferring your balance could save you money, but be sure you understand the terms of the transfer, including the balance transfer rates, any set-up fees, the length of the interest term, potential penalty fees and the minimum repayment required each month.
Draw up a budget
Before you hit the shops, make a list of what you actually need to buy, for your food menu, as well as your gift list. Focus on what you can afford - try adding a price range for gifts to help you stay within budget. Make sure this Christmas spending budget is part of your household budget, so you can manage the overall effect Christmas spending has on your finances over a few months. Just having a plan and knowing how you’re going to manage your finances through this time can help keep your spending under control.
Be honest with your family about what you can afford. Overspending can be the result of feeling pressure to meet other people’s expectations - or your own - about what Christmas should be like. Ask yourself what people mostly enjoy at this time: spending time with each other, enjoying good food and relaxing. It can get very expensive buying a gift for everyone, especially if you have a big family. Many families do what’s called a Secret Santa where you buy one present for one other person. And, share the load when it comes to feeding everyone: instead of the host having to provide everything, everyone could bring something to contribute.
Why not organise a house-sit or house-swap for a more affordable getaway? Cash in any credits on your loyalty cards to spread the load of your Christmas spending. Check out online auction sites for good gift deals. Give a list of ‘offers’ as a gift – parents will always appreciate offers to babysit. Handmade presents are generally cheaper and more meaningful – try these ideas for under $10 or these ideas for under $20. Remember that what you hold back on spending at Christmas can help when your credit card bill comes in.
Plan ahead for next Christmas
Start saving sooner! Make up another budget and figure out how you can fund your Christmas and holiday season spending for next year. How about buying presents throughout the year when stores are having sales and specials? If you’re keen – and it fits in with your budget - brave the post-Christmas sales when stores are trying to get rid of last year’s stock in a hurry.
By making some different financial choices next year, you could have an even merrier Christmas and a happier New Year!