Managing the Christmas Credit Card Overspend

Christmas is traditionally one of the most expensive times of year for Australian consumers.

Despite the onset of the global financial crises in late 2008, Australians spent $36.95 billion dollars at retail stores during the Christmas season.

While the Federal Governments $8.7bn pre-Christmas stimulus package certainly helped buoy the economy, more than a few Australians look to their credit cards as their financial saviour throughout the festive season.

Early season consumer sentiment indicators released by Westpac show that this season consumers want to be more cautious about their credit-spending. However the recently released Harvey Norman profit forecast shows that Christmas 2009 looks to continue the trends of previous years.

Between the gifts, the food, the holiday and the other expenses associated with the Christmas season it is quite easy to forego the budget, pull out the credit card and worry about the repayments later. So how can you maximise your credit card payment options and not get into too much debt?

Avoid the impulse purchases

Avoid haphazard purchasing by clearly planning your Christmas purchases with lists of the gifts, food and other items you really need to buy. Carry the lists with you on all shopping trips, ticking off items as you purchase them. Also, set budgets for each gift, and stick to them.

Avoid long shopping trips

Tiredness takes over at the end of a shopping day and you stop watching the dollars because you just want to get home and put your feet up, causing you spend more than intended. Try to plan your Christmas shopping as several smaller trips.

Consider shopping online to avoid the bustle and excitement

An alternative to shopping in a busy, bustling shopping centre is to shop online where you have time to select your products and don’t have the excitement and pressure that you get when shopping in overcrowded stores.

Use the lowest interest card

If you need to use a credit card for your Christmas debt try and use a card that has the lowest interest rate just in case you have to carry over a balance.

Know your balance

Don’t just shove that credit card statement in the drawer. Simply knowing your balance, and understanding the amount you will need to repay, can help keep your spending in check.

Plan your repayment budget as soon as possible

Try to have a repayment plan before the bills start arriving, and stick to the plan. As an added incentive, consider setting the goal of not using your credit card until you have the balance paid off.

Apply for a low/0% interest balance transfer card

Consider transferring your credit card balances on to a new balance transfer credit card that offers up-to 6 months of reduced or zero interest to help you repay your debt quicker.

Plan for next year

Managing your Christmas debt isn’t just about getting your cards paid off post-season. Early planning can help reduce the need to build a debt. Here are three quick tips to start planning for Christmas 2010 early:

• Once your Christmas credit card debt has been paid off, start saving ready for next Christmas. Open a high-interest savings account and commit to making a deposit each pay-day (say $10-15 a week).
• Start buying gifts early. Consider the July mid-year sales or the September mid-season sales as the perfect opportunity to start a lay-by that can be paid-off a little each week over a couple of months. Alternatively, buy one present a week and start a collection of gifts in the back of your cupboard.
• October is a great time to start purchasing a few extra items of tinned or frozen food each week. By spending a little extra on food in each weekly shop, you can greatly lighten the load in December.

Christmas Credit Card Offers

0% for 6 months Balance Transfer Credit Cards: if you have an existing balance

Citi Clear Platinum

• Very unique offer with 11.49% on purchases and 0% p.a. for 7 months on balance transfers
• After 6 months, reverts to 11.49% p.a. interest rate
• Annual Fee $99

Day to day spending – where you carry a balance each month

Consider a low interest card, particularly if your credit card currently has an interest rate over 15% p.a.

Bankwest Lite MasterCard

• 10.75% interest p.a. – lowest purchase rate for a MasterCard
• 1.99% p.a. for 9 months on balance transfers
• Annual Fee $59

If you pay your balance off in full, consider a rewards credit card

Woolworths Everyday Money

• Earn up to 3 reward points for every $1 you spend^ on your Everyday Money card, every 4 months, if you have enough points, you will automatically be sent a shopping card.
• 0% p.a. for 6 months on balance transfers
• 19.49% on purchases
• No annual fee for the first year.
• Earn points for everyday spending. Points are redeemable for shopping cards
  • Earn up to 3 points for every dollar spent if you purchase Woolworths select products
  • 2 points for every dollar for purchasing at select stores within the Woolworths group including Woolworths & Safeway Supermarkets, BIG W, Caltex/Woolworths Petrol Stations and Dan Murphy’s.
  • 1 point for every dollar on any purchase

Emergencies / or if you pay off your balance regularly

Consider a $0 annual fee for life credit card

Bankwest Zero Platinum MasterCard

• $0 annual fee for life
• 3.99% p.a. for 9 months on both purchases and balance transfers
• 16.99% revert rate for on-going purchases

Today Show Interview with Jeremy Cabral from Credit Card Finder

• Comparison of Top 10 Credit Card Offers

Editor's Choice: Our Top Credit Cards

Credit Card	Card Details	Interest Rate (p.a.)	Cash Advance Rate (p.a.)	Balance Transfer Rate (p.a.)	Annual fee	Interest free days (up to)
HSBC Credit Card	Editor's Choice: 0% for 6 months Balance Transfer & No Annual Fee Featuring a $0 annual fee for life, and 0% p.a. balance transfer for 6 months, the HSBC Credit Card was voted the Best Transactor Credit Card for 2010.	16.99%	20.75%	0% for 6 months	$0	55
Suncorp Clear Options Standard Visa Card	A great 12 month balance transfer offer, combined with a low annual fee and a good interest rate on purchases.	12.24%	17.99%	1.9% for 12 months	$39	0