This time of year is always tough on your bank balance and we can all be tempted to rely on credit cards or loans to see us through. It isn’t just expensive presents, it’s buying the food and treats for the family, heating the house and of course, having a tree with lights will take its toll on your electricity bill.
While it might be tempting to whip out the credit card to tide you over during this time of year, you will need to keep in mind that interest quickly builds up, especially if you put off payments which can lead to the debts getting away from you.
To try and avoid falling into the trap of Christmas debts, here are some tips to help you cover all the costs.
- Stick to a plan
Before you start your Christmas shopping, work out a budget of how much you need to pay your usual bills, with a little extra to cover using extra lights and heating, plus food. Then with what you have left over, come up with an idea of how much you want to spend on each person and stick to it. - Set up an awards account
If you don’t already have one, ask your bank about awards accounts. Many banks offer an awards account where if you pay for certain items using your debit card, you can earn cash back or discount vouchers. These can be helpful when it comes to paying your utilities as you’ll earn money for paying your bills which can then be used on something else, plus if you get discounts for high street stores, these can be put towards Christmas presents. - Use loyalty schemes where you can
Many companies offer loyalty schemes where spending so much over the year will give you money off at Christmas or will reward you with vouchers that you can spend on food or gifts. If you are involved in any loyalty schemes, make sure you reach the requirements to get the awards as these can really help at this time of year. - Avoid going into your overdraft
If you can avoid it, stay clear of your overdraft, you will get charged for it and that can cause more problems. If you need to go into it, speak to your bank first and see if they have other options for you, like a small loan or a credit card. - HOWEVER! Credit cards and loans can cause their own issues if payments are missed or the monthly payments are too much. If you can keep up with them, make sure the minimum amount is paid off each month, otherwise you’ll find yourself being hit with penalty charges. Put payment dates in your calendar or set up direct debits so you don’t forget to pay them.
- Compare credit deals
If you are going to use a credit card or loan, shop around and compare interest rates. Some cards have a high interest rates, but offer you discounts or interest free periods, which might work better for you. Don’t grab the first card you see, do your research.
If you do find yourself struggling to make ends meet at this time of year, don’t let it distract you from having a good time with your friends and family. There are plenty of resources available to help you if you get into a sticky situation, including advice on swapping to a better credit card deal or attending a free debt counselling session. Speak to your local Citizens Advice Bureau or head online to find what is available in your area.
