Just yesterday Uswitch.com predicted that 1.7 million people in the UK will resort to taking cash out on their credit cards to fund Christmas.
If you are one of those 1.7 million, STOP, put the credit card down slowly and read on.
It is all too easy to reach for the credit card and the cash machine when some quick cash is needed, but drawing cash out on your card isn’t the only way of freeing up some money to use for Christmas.
One good way of juggling your finances is to pay for everyday items, such as your grocery shopping and fuel, on your credit card, which would ideally have some sort of 0% purchase offer or a long-term low rate, and then set aside the cash you would have used ordinarily to pay for these items to go towards your Christmas shopping budget.
It would then be sensible to set yourself an affordable repayment plan so that you can aim to have the credit card balance paid off before the end of the interest free purchases offer or low rate deal.
Currently, the longest 0% on purchases offer you will find is on the Capital One Platinum Credit Card, which is offering interest free purchases until November 2009.
If you don’t think you will qualify for a platinum credit card, the longest offer on a standard card is 6 months. Click the link to see ourinterest free purchase cards.
Just in case you can’t get a long enough 0% purchases offer it is worth bearing in mind the difference in interest rates between a cash withdrawal and using your card to make a purchase at a standard purchase APR.
Cash withdrawals are typically charged at an interest rate of around 27.9% from the time you withdraw the cash. This is pretty much the same as a store card or paying for the item on store credit. However, typical purchase rates are around 16%, which is almost half that charged on cash withdrawals.
If you don’t want 6 months 0% on purchases and then an interest rate of around 16%, you may want to consider a long-term low rate credit card such as the Barclaycard Simplicity Credit Card which offers a low typical APR of 6.8% on both purchases and balance transfers for as long as you have the card. This will work out to around 0.5% a month, so your repayments shouldn’t be eaten up too much by the interest charges and it should be achievable to pay this off before next Christmas.
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