Don't Finance Santa
Analaura Luna
Exclusive media interviews: Christmas shopping and saving tips
|
|
|
|
|
Click to listen to Wilson's interview with Kim Mothershaw on 4BC
|
|
Click for interview on the Christmas Credit Crush with Andrew Reimer on FIVEaa
|
|
Click for Don't Finance Santa interview with 2UE's Tim Shaw
|
|
| Click here for all of our recent media coverage |
Everyone loves Christmas ... but no one loves getting their credit card bill in January! Here's how to make sure that your new year isn't spoiled by a credit hangover!
With Christmas just around the corner, you’ve probably been thinking a lot about cards lately. How many are you going to need to send out? Where are you going to put the ones you receive? And why do nearly all of them have snow on them when it’s the middle of summer? But while getting your Christmas cards in order can be a pretty big job, there’s another card you need to keep your eye on during the holiday season – your credit card. The big day’s getting closer and closer and most of us are racing to finish (or start!) our Christmas shopping. And credit cards can be an easy and convenient way to get it all done on the run, especially if the budget’s tight and you need a little help with money at the moment – but the problem is that they could be costing you more than you think. Last year’s retail figures revealed that Aussie shoppers put a whopping $21 billion on credit in December alone, and with Visa recently recording a fourth-quarter profit increase of 51 per cent from a year ago, it doesn’t look like consumers are slowing down this year. Which leads us to two questions: how many of us are still paying off last year’s Christmas bill? And how do we avoid doing the same thing next year?
The lead-up to Christmas can be a difficult time financially for many Aussie families – especially when kids don’t understand that ‘Santa’ needs to pay the elves! In the rush to fill those stockings with presents, the appeal of the ‘buy now, pay later’ can be tempting. And if you’re not careful about how you manage your credit card, there’s every chance that you’re going to end up buying now and paying a lot more later.
If you’d like to make sure the only cards you have to worry about on Christmas Day are the ones with rosy-nosed reindeer and surfing Santas on them, there are three things you need to keep in mind when you do your shopping this year:
Say ‘no’ to cash
We all know the old saying ‘You pay less for cash’ but when it comes to credit cards this couldn’t be further from the truth! Cash advances on credit cards are typically charged at a much higher interest rate – most are currently hovering just over the 20 per cent mark – and interest-free periods usually don’t apply, which means you’ll be paying interest right from the day you get that cash advance.
Get interested
Interest-free periods can make credit cards a good option to cover short-term budget shortfalls, but you need to make sure that you’re disciplined about paying the full balance off before the interest-free period expires. The reason credit card companies offer interest-free terms in the first place is because they know a lot of people won’t manage to pay the entire balance before the interest-free term runs out – and once that ‘honeymoon’ period expires you can find yourself footing the bill for hundreds of extra dollars in interest (which is added to your credit card balance and will attract interest of its own, making it even harder to get ahead of the full balance on your card before the next interest-free period expires).
Set your own payment plan
One of the most effective credit debt solutions is to ignore the ‘minimum payment due’ amount on your credit card statement – it’s typically only three per cent of the total balance, and is designed to keep you in debt indefinitely by preventing you from realising how much you really owe. Instead, work out your own monthly payment plan based on repaying the entire balance to take advantage of the interest-free terms. If you can’t pay the whole amount back, pay off as much as you can to bring that interest-bearing balance down – it will cost you less in the long run. If you’ve got more than one credit card, it might be worth considering consolidating your credit debt onto a zero-interest card – make sure you get the card that will revert to the best interest rate possible after the ‘honeymoon’ is over – and use this opportunity to pay back the balance before the interest-free period expires. Once you transfer all your debt onto that new card, cut your old cards up so you can’t be tempted to use them again!
Credit cards can be really convenient, but they can also give you a financial hangover that really ruins the Christmas experience. Use these great tips to boost your money managing skills and get credit-card savvy so you can have a great time this Christmas, without having to worry about how you’re going to pay for it all next year!
And now you know what to do with your credit card this Christmas, the only card problem you’ll have to solve is whether to give Great-Aunt Jane a card with Rudolf or Santa on it …
If you liked this article you might
also be interested in these articles:
How to benefit from a strong Aussie dollar
Born to be financially free
Want more? Take a look at the rest of our money management articles.
Share your thoughts,
ideas and tips with the rest of the YFYM
community ... visit our live forum
to have your say!
Make sure you get the latest money management advice - bookmark YFYM today!
Tags: money managing, credit debt solutions, best interest rate, help with money, money management
|
 |
|
Analaura Luna is an author, wealth adviser and founder of Your Family Your Money. Your Family Your Money’s goal is to simplify traditionally complex financial strategies, demystify financial jargon and debunk common financial myths, becoming every family’s first stop for financial advice, information and inspiration.
|
 |
