Overspent at Christmas? Now get the balance right

As we begin to feel the effects of our Christmas spending, moving to a 0% deal is important to get your finances on track…

Spending on a credit card at Christmas has a different vibe to splashing out with cash. Handing over several notes gives us a short, sharp shock – whereas plastic is fantastic at easing the pain of big spending…

At least until January!

Hangovers usually last long past New Year when credit card statements arrive and we realise just how much we’ve spent. Even though figures from the Association for Payment Clearing Services (APACS) suggest 68% of us usually or always clear the balance on our credit cards each month, this is one time of year when paying off the bare minimum can seem like a mountainous struggle.

That’s why it’s vital to ensure you’re paying as little interest as possible – and this is where the 0% balance transfer card comes in. By transferring your balance to one of these cards, you won’t pay any interest for the duration of the introductory period.

According to the moneysupermarket.com credit card comparison tool there are still a host of 0% balance transfer cards on the market – the longest 0% interest period being 15 months available with the Virgin Credit Card (typical APR 15.9%).

This is closely followed by the Egg Card, which also offers 0% on balance transfers for 15 months (typical APR 16.9%), and the Barclaycard Platinum with 0% on balance transfers for 14 months (typical APR 14.9%).

Though the idea of paying no interest for 12 months or more will draw a lot of attention, it is worth looking beyond these headline grabbing periods and noting the balance transfer fees too – 2.98% on the Virgin Credit Card compared with 3% on the Egg Card and 2.5% on the Barclaycard Platinum (this fee is only available for a limited period on the Barclaycard).

None of these fees are particularly low, so if you want to pay less in the short-term you might prefer to look at the Capital One Platinum, which offers a slightly shorter 0% balance transfer term (until 01 November 2008) but has a much lower balance transfer fee of 1.7%. It also has a low typical APR at 9.9%.

However, if you’re one of the 68% who usually clears their balance each month, even in January, then you should be looking to earn a reward for your ‘good behaviour’.

There is a host of appealing rewards cards on the market including the MBNA Platinum Rewards Card which offers one point for every £1 spent, as well as 0% on balance transfers for 12 months (3% handling fee; typical APR 15.9%).

If you prefer cashback, the Capital One Cashback Card offers 4% cashback on all purchases for the first three months and 1% thereafter, with a typical APR of 15.9%.

With the effects of the credit crunch looming large in the New Year, providers are still tightening their lending criteria. This means that the market leading deals, such as those I’ve outlined above, will only be available to those with angelic credit scores.

If you have any blotches on your credit history, you should request a copy of your credit report and take measures to protect your score in the future such as by registering on the electoral roll and setting up direct debits to ensure you don’t miss any monthly payments.

Remember to search with our credit cards SmartSearch tool to see the deals you’re likely to be accepted for rather than making a series of rejected applications that will only further harm your score.

No matter what type of cardholder you are, the deals are out there – so don’t sit on a card that’s not working for you.

It’s a new year – and you deserve a new credit card that meets your needs.

DISCLAIMER: Please note that any rates or deals mentioned in this article applied at the time of writing and may no longer be available/applicable today.

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