Most people are understandably wary when it’s time to open up the first round of bills after the Christmas holiday season. It’s hard not to get caught up in the excitement of the season, and many of us overspend on our credit cards. So how can we minimise the damage to our personal finances?

There are some very positive steps you can take to cut down on the amount of interest you pay if you have a decent credit history, steps including using 0% credit cards and balance transfer credit cards.

Sometimes 0% credit cards and balance transfer cards are one and the same, but other times a card will offer either 0% purchases for a limited time or 0% balance transfers for a set time, but not both. We’ll assume you’ll use them separately.

If you apply for and receive a 0% purchase card, you’ll pay 0% interest on purchases for a certain time period – usually around six months. If you can find one of these with a cashback feature and you are able to pay off the entire balance before the 0% rate ends, you can actually pocket a bit of money from these cards once the offer is over. At that point, you will need to decide whether to keep the card or cancel it.

With a 0% balance transfer card, you’ll pay a balance transfer fee which will be around 3% of the amount you’re transferring. So if you’re transferring a balance of £600, you’ll pay around £18 to do the transfer. But this is much, much less than you’ll pay in interest if you proceed to pay off the £600 before the 0% balance transfer ends.

With these cards, purchases are charged at a typical interest rate, and used to be paid off after the balance transfer is paid off (only until the end of 31st December 2010 because new rules came into force on 1st January 2011 saying that credit card providers have to put your payments towards the most expensive debt first, in this case purchases, rather than the cheapest debt first), so you used to be highly advised to use such a card only for the balance transfer, and to use another card altogether for purchases.

From 1st January it may still be worth heeding the tips to not use a balance transfer credit card for purchases. This is because the time it takes you to pay off the purchase debt accumulating the higher interest charges will then eat into the time you were initially given to pay off your 0% balance transfer debt – the money you do pay off will pay off your purchase balance before your 0% balance tranfser balance.

Use 0% credit cards and balance transfer cards with discipline, and you can save serious money in 2011.