You’ve finished your Christmas gift list: Mum, Dad, Uncle John, Aunty Deborah, their gaggle of children, the bank, your cousin Fred – WAIT, what? How did your bank make it onto the Christmas list?
You may not have thought about it, but if you’re paying credit card fees and interest while shopping up a storm this Christmas, your bank could be enjoying a bumper bonus on your dime. And let’s be honest – at this time of year, you’ve definitely got better things to spend your money on.
So if you want to cross your bank off your Christmas list this year, follow these simple tips to do it:
Pick a 0% interest credit card
First things first, make sure you’re carrying the right plastic. Credit card interest rates are notoriously high – the average rate in Mozo’s database is currently around 17.36% – and that really is a nightmare before Christmas.
Luckily, there are plenty of low rate credit cards out there to keep you spending for less, plus, some 0% offers so you can avoid the sting of interest all together. Here are some of the top offers:
|Credit card||Interest rate||Introductory offer||Annual fee|
|Coles No Annual Fee MasterCard||19.99%||0% for 15 months||$0|
|Virgin Money Virgin Australia Velocity Flyer Card||20.74%||0% for 12 months||$129|
|Citibank Clear Platinum||14.99%||0% for 9 months||$99|
|ANZ Low Rate||13.49%||0% for 6 months||$58|
Just remember, once the 0% interest period runs out, any balance left on your card will be charged interest at the usual amount. That’s why you should always…
Pay your bill on time
Santa is punctual and you should be too! You’ll usually have 44 or 55 days to pay off your credit card spend interest free, and by taking full advantage of these days, you can use your card interest free.
If you get caught up in all the Christmas cheer – and adults-only punch – and forget to pay at least the minimum amount, you’ll wind up getting hit by a late payment fee that can run as high as $35.
One easy solution is to set up automatic payments, so you know your bill is being paid off each month, and you can be free to enjoy the holidays without worrying.
Beware Grinchy bonus offers
In the lead up to the Christmas spending season, credit card providers have been rolling out a heap of enticing sign-up bonus offers – but don’t be fooled! While there are some great pre-Christmas bonus offers around, scoring freebies and even cashback may not be worth it if your new plastic comes with a sky high interest rate and annual fee.
So make sure you weigh up the value of the bonuses on offer and decide if they’re worth the cost of the card before signing up this spending season.
Swear off cash advances this Xmas
A good way to stick to your Christmas spending budget is to withdraw it in cash at the beginning of your shopping trip, and spend only that amount. But if you’re heading to the ATM with a credit card in hand, think again.
Cash advances on your credit card get expensive quickly, because not only will you pay a fee (usually between $2-2.50) but you’ll also get hit with cash advance interest – sometimes higher than 20% – right away. Plus, interest free days and 0% offers don’t apply to cash advances.
If you do want to use cash to pick up your pressies, the best way to avoid paying these charges is to use a debit card instead, and only flash your credit card at the checkout.
Consider surcharges when you swipe
Although regulations have been introduced to stop big retailers charging ridiculous surcharges for using plastic at the counter, you should be aware that in many cases some surcharges still apply. There are usually higher charges for credit cards than debit, and sometimes you’ll also pay an extra surcharge for the convenience of Tap ‘n’ Go.
That means that if you’re heading to a bunch of different shops in search of the perfect present for everyone, you should take the time to find out what charges are in place in each one, then adjust your payment method to choose the most affordable. It might be as simple as inserting your card rather than tapping, or, you might opt to pay cash if the surcharge is more than you’re willing to pay.
Want more tips on having a frugal Christmas? Check out these creative ways to avoid a Christmas budget blowout.