It’s Christmas – I need credit

Information verified correct on September 26th, 2016
grinch3

How to Grinch the bank this Christmas and avoid a credit hangover

Christmas has arrived, and with it, so has the dreaded spending.

Christmas is fast approaching, and for many Australians this means debt. Different research puts the total we spend on Christmas gifts anywhere around the $500 mark and this is excluding the cost of food and other Christmas expenses: the all-important Christmas tree, the Christmas Day feast and the costs of travelling to see interstate or overseas family.

According to a 2014 Credit Card Finder Christmas survey, $27 billion is expected to be spent on credit cards this December. This is compared to $26 billion that was spent in December of 2013.

With the amount Australians are going to spend on their card, it’s all about planning how you use your card and making the most of the promotional features. There are cards to spend with and cards to consolidate and pay off your debt with. The key is knowing when to use what, and whether the cards on offer are suited to your personal circumstances.

Cards to consider spending with

Credit card purchase interest rates can vary between 10% and 20% for some cards — so it’s crucial that you go into the festive season with the right credit card. Consider this: a low rate credit card charges on average about 13% interest on purchases, a frequent flyer card will charge around 20%. A difference of 7% on a balance of $1000 equals an extra $716 in interest payments and approximately 3 years extra to pay off the card, assuming only a minimum repayment of 2% or $20 was made each month.


Avoid the Christmas credit hangover: cards to get you out of the red

Imagine this (for some, it shouldn’t be too much of a stretch), you’ve racked up charges on your credit card over Christmas and you’re wondering how to go about managing the debt. A balance transfer might be a sensible option.

Rates last updated September 26th, 2016
Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee
Virgin Australia Velocity Flyer Card - Balance Transfer Offer
Offers 0% p.a. interest rate on balance transfers for 18 months to help you manage your existing credit card balance with a reduced annual fee in the first year.
20.74% p.a. 0% p.a. for 18 months $64 p.a. annual fee for the first year ($129 p.a. thereafter) Go to site More info
St.George Vertigo Visa
Introductory offer of 0% p.a. for 18 months on balance transfers and 1% p.a. for 12 months on purchases, plus a low annual fee.
1% p.a. for 12 months (reverts to 13.24% p.a.) 0% p.a. for 18 months $55 p.a. Go to site More info
Westpac 55 Day credit card
Enjoy a balance transfer offer of 0% p.a. for 16 months, an introductory purchase rate of 1% p.a. for up to 12 months, plus a waived annual fee for the first year if applied by 11 October 2016.
1% p.a. for 12 months (reverts to 19.84% p.a.) 0% p.a. for 16 months $0 p.a. annual fee for the first year ($30 p.a. thereafter) Go to site More info
HSBC Platinum Credit Card
Receive a full annual fee refund and save $149 if you meet the $6,000 spend requirement. Enjoy a balance transfer offer and platinum card benefits such as complimentary insurances and concierge services.
19.99% p.a. 0% p.a. for 15 months $149 p.a. Go to site More info
Westpac Low Rate Card
A no frills credit card with an introductory rate of 0% p.a. for 18 months on balance transfers and 1% p.a. for 12 months on purchases.
1% p.a. for 12 months (reverts to 13.49% p.a.) 0% p.a. for 18 months $59 p.a. Go to site More info
St.George Vertigo Platinum
A platinum card with a balance transfer offer of 0% p.a. for 20 months and an introductory purchase offer of 1% p.a. for 12 months with an annual fee waiver for the first year.
1% p.a. for 12 months (reverts to 12.74% p.a.) 0% p.a. for 20 months $99 p.a. Go to site More info
NAB Low Rate Credit Card
The NAB Low Rate Card offers 0% p.a. on purchases and balance transfers for 15 months. This card also comes with a low annual fee.
0% p.a. for 15 months (reverts to 13.99% p.a.) 0% p.a. for 15 months with a one off 2% balance transfer fee $59 p.a. Go to site More info
ANZ First Visa Credit Card - Exclusive Offer
Take advantage of this exclusive offer and enjoy 0% p.a. for the first 12 months on balance transfers and 0% p.a. for the first 3 months on purchases.
0% p.a. for 3 months (reverts to 19.74% p.a.) 0% p.a. for 12 months $30 p.a. Go to site More info
Virgin No Annual Fee Credit Card
Enjoy a long term balance transfer plus a $100 cashback offer (spend criteria applies) and never pay an annual fee for this card.
18.99% p.a. 0% p.a. for 18 months with 2% balance transfer fee $0 p.a. Go to site More info
NAB Low Fee Card
Enjoy a low introductory rate of 0% p.a. on balance transfers and purchases for 15 months.
0% p.a. for 15 months (reverts to 19.74% p.a.) 0% p.a. for 15 months with a one off 2% balance transfer fee $30 p.a. Go to site More info
Bank of Melbourne Vertigo Visa Credit Card
Enjoy a low annual fee combined with 0% p.a. balance transfer offer for 18 months and 1% p.a. for 12 months on purchases.
1% p.a. for 12 months (reverts to 13.24% p.a.) 0% p.a. for 18 months $55 p.a. Go to site More info
American Express Essential Credit Card
Receive a $50 credit on eligible spend and get Smartphone screen insurance combined with a no annual fee for life card. Also enjoy a 0% p.a. balance transfer rate for 12 months.
14.99% p.a. 0% p.a. for 12 months with 1% balance transfer fee $0 p.a. Go to site More info
Citi Rewards Credit Card - Platinum Card
A long term balance transfer offer with the Citi Rewards Platinum Card. Earn extra points on overseas spend and includes travel insurance.
20.99% p.a. 0% p.a. for 24 months with 1.5% balance transfer fee $199 p.a. annual fee for the first year ($249 p.a. thereafter) Go to site More info
American Express Explorer Credit Card
Receive 100,000 Membership Rewards Bonus Points on eligible spend within the first 2 months of Card Membership. Also enjoy a $400 travel voucher and two complimentary airline passes per year.
20.74% p.a. 0% p.a. for 12 months with 1% balance transfer fee $395 p.a. Go to site More info

Five golden balance transfer rules to remember this Christmas

  1. You can only transfer up between 70-95% of your available credit limit. This figure changes between providers, but as a general rule of thumb, you can expect to transfer 90-95% of your credit limit on the card you want to transfer to. For instance, if you want to transfer $950 from card A to card B, card B will need a credit limit of at least $1000.
  2. You can not take advantage of a promotional balance transfer offer if you’re transferring between two related credit cards. In order for a balance transfer to be accepted, you need to be transferring the balance between two non-related credit cards. For instance, a balance transfer will not be accepted between two ANZ credit cards, or for that matter, between two ‘non-related’ cards where one is the credit provider for the other. HSBC provide credit to Woolworths to fund their credit operations and subsequently balance transfers are not allowed between these providers.
  3. No interest-free days. You do not get interest-free days if you are carrying a balance transfer balance. Interest free days on purchases do not apply if you’re carrying a promotional balance.
  4. The interest rate will not stay low forever. After the promotional period finishes, the interest rate charged on the balance transfer amount will revert to either the purchase or cash advance rates of interest.
  5. Balance transfers do not earn points. You won’t earn points on promotional offers like balance transfers. It’s a feature to help you manage your credit card.

Naughty and nice: Christmas credit card tips and traps

Naughty

When interest-free doesn’t really mean interest-free. Putting aside interest-free promotions, a common credit card perk is the addition of up to 55 days interest-free on purchases. These interest-free days will only apply if you pay your credit card off in full every month. If you’re carrying a balance from month to month, you will be charged interest from the day you make a purchase.

The minimum repayment trap. If you find yourself with a credit card debt on the backend of Christmas, don’t fall into the trap of only making the minimum repayments. The above examples show how long it takes to pay a card off just paying the minimum. Depending on your balance it could be a matter of years or decades before you finally get the card paid off. And in some instances, you may never be able to pay the card off at all. Credit card statements will now show you how long it will take for you to clear your credit card debt if you’re only making the minimum repayment.

Nice

Protect your purchases.Although you’re going to pay more for it, some of the bells and whistles which are complimentary on a premium card will give you added protection this Christmas. There are a range of insurances offered with these credit cards but extended warranty and purchase protection insurance are the two most relevant for the Christmas season. Purchase protection insurance offers cover against theft, loss, or accidental damage that occurs within 90 days of the purchase date. Extended warranty does what the name suggests, it provides extended warranty on items purchased with your card. Refund protection is also a great credit card perk to have coming into Christmas. Not everybody gives the right gift, and you can rest a little easier knowing that if, ‘the glove don’t fit’, you can always take it back.

Fraud protection. Another benefit of using a credit card this Christmas is that you’re protected against fraud. Visa, MasterCard and American Express have zero liability policies which protect you against unauthorised charges made using your card. Most institutions also actively monitor their customer’s accounts 24/7 for suspicious charges, and during Christmas when you’re making a large amount of purchases and payments this protection can save you thousands.

If you plan to spend this Christmas, make sure you have an exit strategy for the new year. Credit cards are a great tool to manage your holiday spending — just don’t let the card get one over you this Christmas.

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Jacob Joseph

Jacob is a writer and video journalist with finder.com.au. Credit cards, personal loans and savings accounts are his bread and butter, and he likes nothing more helping people understand the sometimes overly complex world of personal finance.

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Credit Cards Comparison

Rates last updated September 26th, 2016
Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee
Virgin Australia Velocity Flyer Card - Balance Transfer Offer
Enjoy a 0% p.a. balance transfer offer for 18 months and also earn 2 bonus Velocity Points in the first 3 months on everyday spend.
20.74% p.a. 0% p.a. for 18 months $64 p.a. annual fee for the first year ($129 p.a. thereafter) Go to site More info
ME Bank frank Credit Card
Enjoy a low and consistent interest rate on purchases and cash advances, combined with no annual fee.
11.99% p.a. $0 p.a. Go to site More info
St.George Vertigo Visa
Introductory offer of 0% p.a. for 18 months on balance transfers and 1% p.a. for 12 months on purchases, plus a low annual fee.
1% p.a. for 12 months (reverts to 13.24% p.a.) 0% p.a. for 18 months $55 p.a. Go to site More info
HSBC Platinum Credit Card
Receive a full annual fee refund and save $149 if you meet the $6,000 spend requirement. Enjoy a balance transfer offer and platinum card benefits such as complimentary insurances and concierge services.
19.99% p.a. 0% p.a. for 15 months $149 p.a. Go to site More info

* The credit card offers compared on this page are chosen from a range of credit cards CreditCardFinder.com.au has access to track details from and is not representative of all the products available in the market. Products are displayed in no particular order or ranking. The use of terms 'Best' and 'Top' are not product ratings and are subject to our disclaimer. You should consider seeking independent financial advice and consider your own personal financial circumstances when comparing cards.

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