Hi, my name is Adam Stewart, Debt Collection Expert and owner of ADC Legal Litigation Lawyers.
Paying for Christmas presents with credit is easy and convenient but if you are not careful you can quickly find yourself drowning in debt. Here are some of my tips on how to avoid a debt hangover this Christmas.
1. Be smart and set a budget.
Plan. The government has a great website to help if you want to do things like set a budget, calculate how much your interest charges are going to be on your credit cards, financial calculators and apps or just to get some help with how to manage debt. Visit their site.
It has a very handy credit card calculator, that will show exactly how much interest you will pay on your charges. Very sobering figures!
2. Maximise the interest-free days.
Interest-free days provide some relief from having an expensive Christmas by giving you extra time to pay off your expenses rather than having all the costs hit at once. Maximise the interest-free days, which range from 40-60 days.
Be aware that if you don’t pay it off within the interest free period, the average interest charged on cards is around 17.5%, so be prepared in case you get caught out.
3. Be aware of balance transfer offers.
With Christmas coming up, people need to be aware of banks offering credit card balance transfer offers where one credit card company will offer to transfer the balance of your current card over to their card.
What they don’t tell you is that it ends up at a higher rate of interest and often comes with a lot of hidden charges for the new card.
Debit cards are gold in terms of controlling your spending. It’s a credit card that is in debit, i.e. you put money into the account, then spend the money on the card, using it like a “credit” card, but only up to the value of the money you have deposited into it.
4. Use alternative ways to pay for Christmas presents.
Pay for gifts with rewards points, if you have them. Christmas is a great time to cash these in. Check your balance and see what you can get. In the days leading up to Christmas, keep an eye out for items you need that earn more points so you can build up your balance. Also, look for discounts that might be offered through your existing insurer or credit card provider for retailers.
Like what we mentioned in number 3, think about a debit card, rather than a credit card.
Have a think about a creative gift, such as an experience you may be able to give someone. Even a do-it-yourself (DIY) gift would be well-appreciated. If it’s a service you provide, have a think about creating a coupon and give this as your present.
5. Shop online only.
This is another way to avoid over charging to your credit card. Try and shop online and this will circumvent the need to go into the large shopping malls, where you might be tempted to over spend.
Shopping online can virtually guarantee you the lowest price, since you can easily compare several shopping sites all at once, using some of the comparison websites. Some of the more popular ones are Google Shopping, Nextag, Pricegrabber and shopping.com
In the end, it’s the thought that counts. Enjoy buying Christmas presents without creating debt problems.
If you still run into trouble and need some help with debt relief, please contact Financial Counselling Australia, or go to their website.
ADC Legal Litigation Lawyers is a legal practice specialising in commercial advice and litigation, debt recovery and insurance claims recovery disputes. For more information, email us at email@example.com or call 1300 799 820. You may also Skype us at adclegal.