Choose the Best Credit Card for Use at Christmas
Consider 0% on Purchases and Balance Transfer Credit Card Options
Although there are signs the world is slowly coming out of recession, there is still a great deal of uncertainty in the jobs market and families gearing up for Christmas must be careful with every penny they spend.
Credit Card Debt
Recent Bank of England figures (June 2009) show, despite a fall in overall consumer debt, a slight rise in credit card debt. It seems the British buy now, pay later attitude to debt is still alive and well despite the Credit Crunch.
Traditionally credit cards are well used over the festive period, indeed for some families they are the only way of ensuring their children get all the gifts they have asked for, irrespective of the cost. So accepting that many people will again use their credit cards at Christmas, how can they best reduce the impact of heavy spending?
Bearing in mind that some credit card companies are planning interest rate increases there has never been a better time to shift credit card debt from an interest-bearing card to a 0% balance transfer credit card. Currently there are balance transfer deals that last from 6 – 16 months.
There are a couple of very important points to be aware of when applying for a balance transfer card. If the balance on the card is not cleared by the end of the offer period, interest will start to accrue. However at the end of the offer period if the debt is not cleared, that balance could be transferred to another 0% balance transfer card. Any other spending on the card also means that interest will be charged.
A 0% on Purchases Credit Card for Christmas
With the original debt transferred to a 0% interest card consumers should consider a 0% on purchases card for their Christmas spending.
A 0% on purchases credit card works in a similar way to the balance transfer card in that interest will start to accrue at the end of the offer period if the balance is not cleared. Currently there are a number of companies that are offering cards that give between 9 – 12 month interest free. So while both cards offer considerable savings, the process has to be managed, in order to be effective.
Inevitably the best credit cards go to those with the best credit scores so before people apply for a new credit card it’s a good idea for them to make sure their credit report is accurate. In the UK a credit report can be obtained for a few pounds from one of the credit reference agencies listed below.
Credit Reference Agencies:
Experian.co.uk
Equifax.co.uk
This article is designed to be informative but is not offered as financial advice.
Sources:
Martin Lewis, moneysavingexpert.com, credit cards, website accessed 26 September 2009
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