But this year, why not turn it on its head? Instead of stressing and chasing the costs, get organised with the right credit card – and Christmas could even pay you.
Get Christmas to pay YOU!
Paying your credit card balance off at the end of each month not only means you dodge high annual interest fees, but it puts you in the perfectly position to take advantage of cashback deals.
Check these out:
The American Express Platinum Cashback Credit Card is offering 5% cashback on up to £2,500 of purchases in the first three months (so between now and Christmas), dropping to a rate of 1.25% thereafter. If you’re a high roller and spend over £10,001 in any year, you’ll get 2.5% cashback in your anniversary month. On the downside, the card does come with an annual fee of £25 and representative APR is 18.7% (variable).
The NatWest and RBS brand new cashback cards: Fresh on the market from NatWest and RBS, these cards offer 1% cashback on all supermarket shopping (but not on forecourts), a minimum of 1% at selected Cashback Plus retailers (including BP and The Body Shop), 1% on all contactless transactions between now and March 31 next year, and 0.5% on ALL other purchases at home or abroad. The cards come with a £24 annual fee, though.
Santander’s 123 Credit Card comes with a tiered cashback system. You’ll get back 3% of what you spend on petrol (to a limit of £9 a month), 2% back of what you spend in department stores and 1% of what you spend in the supermarket. The last two especially are well-primed perks in the run-up to Christmas.
The card also throws in the first 18 months on spending interest-free, which will give you some time to pay down any debt if you do overspend. It does come with an annual fee of £24 though – and an APR of 16.5% (variable).
Don’t let a bad credit score put you off…
Your credit score will need to be pretty robust to be accepted for one of these headline-grabbing deals. But, if it’s not, there are still options.
Capital One’s Classic Extra Card which is designed for people with milder credit problems, offers 0.5% cashback on all purchases you make. And it will pay a £10 annual bonus provided you make your monthly payments on time. However, this should be a certainty, given that its representative APR is a budget-busting 34.9% (variable). In fact, if you do take this card, set up a direct debit to ensure you clear the balance every month.
Spread the cost and pay ZERO interest!
If you know from the outset that you won’t be able to make the full cost of Christmas, while tightening your belt is the first call to action, a 0% purchase credit card could be a handy fall back.
Interest-free purchase cards allow you to spread the cost of a big purchase into smaller, more manageable monthly payments – and crucially, all without paying interest. Card deals have been getting better in that camp too.
Halifax’s Purchase Credit Card comes with a market-leading 20 months at 0% interest on purchases – meaning you can spread the cost of the next TWO Christmases before interest kicks in. That said of course, no debt is good debt – whether you are paying for it or not.
Tesco Bank’s Clubcard Credit Card for Purchases offers a slightly shorter 19-month 0% term and allows you to simultaneously collect Clubcard points at a quicker rate than you would with a regular Clubcard.
Once the interest-free periods on both these cards expire, APR is set at a representative rate of 18.9% (variable).
Pay 0% interest on balance transfers and purchases
If you’ve debt accruing interest on another card, but could do with some extra spending power this Christmas, the selection of cards offering 0% on BOTH are also improving.
Sainsbury’s Nectar Credit Card is the longest ‘dual 0% card’ offering 18 months interest-free on both balance transfers (subject to a 2.99% fee) and new purchases. You can read all about this offer in Melanie Wright’s article, NEW market-leading 18-month balance transfer and purchase card.
But the fee is not insignificant, amounting to £45 to transfer a £1,500 balance, for example. Tesco’s Clubcard Credit Card with No Fee, however, is free to transfer your balance – but the card offers a shorter 12 months on both transferred debt and new spending.
Mark Hooson has the full lowdown on this new Tesco card, which is the best no-fee balance transfer card on the market.
Why apply now?
Credit card companies usually take around 10 days to process applications and, if you’re accepted, it can take up to six weeks for your card to arrive. If you get too far into the most expensive time of the year without the right plastic, you could be forking out more than you need to – or missing out on cash back in your pocket.
Please note: any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.