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By Julia Kukiewicz Staff Writer
Monday, 3 November 2008
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CHRISTMAS comes but once a year. Handily, it’s also always on the same day. So why are we so bad at preparing our finances for the inevitable splurge?
Post-Christmas debts can seem as inevitable as the post-roast bloat and the post-new year hangover: just another price we pay for our excess.
However, consider this: whilst it would be pointless, not to mention technically impossible, to eke out that Christmas dinner or those New Year’s parties over weeks or even months the same is not true of your finances.
Enter the 0% on purchases credit card.
How do 0% on Purchases Credit Cards work?
0% on purchases credit cards are pretty simple.
For an introductory period – 11 months at the most, 3 at the least - the usual typical rate of interest on the credit card is waived (hence, 0%).
At the end of the 0% period the credit card interest rate goes straight back up so you’ll only make the most of these deals if you can pay back everything you’ve borrowed within the 0% period.
The best way to do that is to follow the five golden 0% credit card rules.
The Golden Rules of Festive Credit Card Spending
1. Stick to the Rules
Your 0% on purchases credit card is for purchases: not balance transfers, not spending abroad, not cash withdrawals. Purchases.
The aim of having a 0% on purchases credit card is to boost your purchase power without having to pay the price at that actual time.
And if you use your 0% credit card for anything other than purchases you will do.
2. Make some rules of your own
Just because you can get a certain amount of credit with a 0% on purchases credit card doesn’t mean that you can afford to spend that amount of credit.
Once you know how long your 0% credit card deal is going to last make yourself a budget.
Ask yourself how much you could realistically pay back every 0% month - be honest. The figure you get is how much you’re going to spend on purchases over Christmas.
If you know you won’t be able to stick to a budget then a 0% on purchases credit card is not for you.
3. Choose the Right Credit Card for You
Use the figures from your budget to compare 0% on purchases credit cards with ChooseMoney’s comparison pages.
Once you’ve found the credit card to suit your budget you’re ready to sign up. Well, just as long as you’ve followed golden rules 4 and 5.
4.Make sure you’re Eligible
As you may have noticed, we are going through somewhat of a turbulent time finances wise.
Banks are increasingly wary of taking on risks and a credit card rejection can harm your credit rating. So check that you’re eligible for your 0% deal. And then check again.
Speaking of turbulent times, it’s worth pointing out here that you should only take out a 0% on purchases credit card if you can definitely fulfil that budget from rule number two.
If you are worried that you’ll lose your income in 2009 forget credit altogether and start saving.
5. Read the Small Print
In the case of 0% on purchases credit cards there’s one particular bit of small print that can become a big problem.
Just because you are not paying interest on your purchases, does NOT mean you are exempt from making the minimum repayments on it.
Make sure that you make the minimum monthly repayments on your 0% credit card, preferably by setting up a direct debit.
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