Christmas is over but it would appear that personal debt from silly season overspending is here to stay. Is your Christmas debt still lingering? If you took out a 0% purchase rate offer in the lead up to Christmas last year, it could be a ticking time bomb.
Half of all 0% purchase rate cards offered in the lead up to Christmas last November are about to expire and hit unsuspecting card holders with painful reversion rates.
Right before Christmas, Australian credit card providers out did themselves with honeymoon purchase rate offers promising new clients 5 – 12 months of interest free purchases. But all good things must come to an end and when they do – it isn’t going to be pretty.
Of the twenty 0% purchase rate offers that were available to consumers in November 2013, half of all those offers are due to expire in March with balances reverting to an average interest rate of 16%. Tack on annual fees that average over $100 and a tendency for making only minimum repayments and you have a real recipe for debt disaster.
With a typical outstanding Christmas balance of $3000 just look at what happens to the amount of interest you’ll pay over the next two years if you make only minimum repayments on a card with 23% reversion rate and $100 annual fee.
In March the honeymoon runs out and in two years your outstanding balance will be nearly back where you started from and you’ll nearly have paid for Christmas twice over through interest.
Christmas debt is a real cash-cow for bank shareholders. But don’t let your Christmas shopping pay for your bank manager’s swimming pool. Get your balance down to size before the end of February or do a balance transfer and give yourself some breathing space.
Disarm the time bomb
For a large balances that call for a long balance transfer period try:
Or, skip fees on a smaller balance with:
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