Let’s face it, Christmas can be an incredibly expensive time, and often a time that our wage packets are unable to handle. In order to prepare for your purchases over the holiday period, you might be looking to apply for a credit card.

Everyone enjoys doing their Christmas shopping in their own way; you could be incredibly organised and have everything bought and wrapped by November, but most of us do it in early December, and inevitably leave some of it until the last minute.

However, with just 35 days  until Christmas Day, you will need to start thinking about applying for your new credit card so that it arrives in time for you to use it for your Christmas shopping.

Of course, there are several different types of credit card available and some take longer than others to arrive due to the way the card application process is handled.

Some credit cards are what’s known as ‘instant decision credit cards’ and they pretty much do what they say on the tin – you apply for the card online and the credit card company comes back to you with its decision within a couple of minutes, unless they need more information from you in order to make the final decision.

Cards that don’t offer an instant decision can take around 7 calendar days to get a decision to you.

Either way, you will still need to sign a credit agreement (some issuers allow you to do this online using a digital credit agreement), and wait for the card and PIN to arrive in the post so it is important that you apply now.

Here are the application deadlines for our top eight Christmas credit cards and have been calculated on the basis that you wish to receive your cards by 5th December, for those organised Christmas shoppers or 18th December 2011, for those who like to leave their festive shopping until the last minute.

It is important that you compare the credit cards available to you before applying to make sure that you choose the one most suitable for your needs (you should only make one application for credit at a time or it will make you look like you are desperate for credit and put off prospective lenders). To ensure that you receive your Christmas credit card in time for you carry out your festive shopping you should apply in plenty of time and account for any potential problems with the application.

Types of credit cards

The way in which you plan to use your Christmas credit card, combined with your credit rating, will affect the credit card you should apply for. Listed below are definitions of the different types of credit cards:

Instant decision

Instant decision credit cards provide many applicants with the result of their application within 60 seconds online. However, these results are not always instant if you do not meet exact criteria. If it is harder for the lender to judge your application, this decision will be delayed. These can be ideal for last minute Christmas shoppers as they are more likely to arrive in the nick of time.

0% purchases

Many credit cards offer customers introductory offers and deals to persuade them to take out their credit card. One of the most common deals for new customers is 0% interest on purchases for a fixed period of time. This is an excellent Christmas credit card because it allows consumers to buy all their festive gifts without having to pay high interest payments too.

0% Balance transfer

This type of credit card is designed to help consumers reduce the cost of their outstanding debt, as they can transfer high interest balances to a cheaper card. This card should not really be used for additional borrowing, but reducing the cost of existing debts. If you are looking for a card to do Christmas shopping a 0% purchases card may be more appropriate.

If you are looking to transfer a balance from another card because your last 0% balance transfer (BT) offer has run out and you need a 0% purchase deal for this year’s Christmas shopping, you can get cards that offer both a 0% BT and 0% purchase interest free period.

Credit-builder

If you don’t have a good or excellent credit rating, you might struggle to get accepted for a standard card. Credit building credit cards are designed to help consumers improve their credit score and their ability to access more affordable credit in the future. This credit card should not really be used to borrow money – you should really just use the card to pay for things and then pay the bill off in full each month to demonstrate to future lenders that you can manage credit sensibly. If you don’t pay your bill off in full each month, you will have to pay high interest charges because the interest rates on cards for building credit are higher than standard cards.

Rewards

These cards reward their customers for spending on their credit cards. Benefits can range from air miles to High Street gift vouchers. The interest rates are usually higher on reward credit cards due to the value of the benefits cardholders can receive. Rewards credit cards are best suited to people who use their credit cards regularly but always pay off the full balance every month. If the balance isn’t paid off in full each month, the interest charged will outweigh the rewards earned.

Christmas credit card tips

• If you have opted for a 0% purchases credit card, make sure you have the ability to repay the outstanding balance before the introductory period expires or you will face interest charges on your remaining balance once the 0% period ends
• Using credit cards for purchases of between £100 and £30,000 will protect you under Section 75 of the Consumer Credit Act, meaning that if a company fails to deliver your items (if it scam you or if it goes bust) you can claim your money back from your credit card company
• Compare credit cards to make sure you are getting the best deal.

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If you’re looking to borrow some cash over the short to medium term, personal loans and 0% credit cards are two of the most popular options. Both allow you to fund the purchase of a one-off item or to fund home improvements at a low interest rate.

While personal loans are often seen as the first choice for many people, 0% purchase credit cards can actually be better than a personal loan for several reasons. Our guide explains why.

Pay less interest with 0% credit cards

0% purchase credit cards allow you to benefit from a period (typically 6-12 months) where you pay no interest on your credit card borrowing. This means that if you’re planning to pay off a one-off purchase within the nil rate period, 0% credit cards can offer you interest-free credit on your borrowing.

This is where the best credit cards for purchases compare favourably to a personal loan. Even if you secure a low rate personal loan, you will still end up paying some interest even if you pay off the loan within a short term.

Make sure you repay the card balance before the 0% period expires

If you plan to use 0% purchase credit cards to borrow, make sure that you will be able to repay the total card balance before your 0% deal expires.

If you don’t, you could end up paying more interest than on a personal loan. This is because credit card interest rates tend to be higher than unsecured loan rates.

Shop around to compare credit cards

When looking for 0% credit cards, make sure you do your homework. There are a number of different 0% credit cards available so make sure you find the right one for you. For example, some only offer 0% interest on certain purchases or at certain stores.

Make sure you do your research and compare credit cards to find the right interest free deal for you.

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Are you planning on making a major purchase in the next few months?

If the answer is yes, there are four ways a credit card can help you:

1. Purchase Cover

The best credit cards for purchases will typically include complimentary ‘purchase cover’ when you use your credit card to buy goods and services. This ensures that your items will be replaced or repaired if they are stolen, lost or damaged within a certain period from purchase. If you don’t use a credit card to pay for your item, you won’t benefit from this cover.

2. 0% credit cards mean no interest

There are a lot of 0% credit cards available to borrowers. This means that you can typically benefit from paying no interest on your purchase for between 4 and 9 months. Why not spread the cost of your big ticket purchase over several months without it costing you a penny more?

3. Extra insurance

If you pay for any travel – flights or a holiday – using certain cards, you may benefit from free travel insurance for you and your family. The best cards for purchases include insurance which will cover you in the event of delay or cancellation. Paying for your trip using your credit card is often worthwhile simply to benefit from this additional benefit. However, bear in mind that it may only be very basic cover so be sure to compare travel insurance too to be confident you have all the cover you need for your trip.

4. Credit card rewards

If your credit card is linked to a rewards scheme, you will receive reward points or cash back based on the amount that you spend on your card. Even if you repay the credit card balance straight away, you may still generate hundreds of rewards points simply by buying the item on your credit card. As many schemes pay points linked to the value of the transaction; the more you spend, the better the rewards.

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If you want to save the most with your credit cards, then comparing credit cards a month or so before your 0% introductory offer runs out is usually fine, as far as letting you minimise your interest charges without causing credit agencies to sit up and take notice of your activity.

Many of today’s low introductory offers last for 12 months or more and applying for a new card to take advantage of a great balance transfer rate, when it’s time for a rate hike on your card, shouldn’t cause problems with your credit history.

Some consumers worry that taking advantage of special credit card offers will cause lenders not to want them as customers, but that is not so. Lenders get fees every time the card is swiped, whether or not you carry a balance.

If you’re considering switching, consider cancelling cards that you are not using and then wait a month for your credit report to update before applying for a new card. You may or may not elect to cancel unused cards, because in some cases having more credit available to you than you actually use can boost your credit rating. On the other hand, having too many cards can make lenders reluctant to offer you more credit – it’s a fine line so be careful where you tread.

In general, however, switching one or two cards once every nine months to a year will not harm your credit rating, as long as your borrowing isn’t out of control. Even if you have multiple low interest cards, there’s no guarantee lenders will continue to offer these deals. Therefore it is extremely important to consider how you would manage your debt should you start having to pay higher interest.

If you have run up a credit card balance with last year’s Christmas shopping or at January sales, and you’re using a high interest card, then you should definitely look for a low interest balance transfer card, assuming you don’t already have a wallet full of credit cards and it’s been at least three months since you last applied for a card. In fact, credit card issuers expect plenty of new applications for credit in the early months of the year as consumers look for ways to cut the interest they are paying on credit cards.

So while there is no fixed answer to how often you should compare credit cards, if you’ve carried the same high interest card for a year or more, then you could save yourself a lot of money by comparing and switching. It’s generally a good idea to wait six to nine months to apply for another card after you’ve just opened a card, to avoid extra scrutiny from the credit reporting bureaus.

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0% purchase cards can be one of your best ways to borrow money for a defined purchase. For example, if you need a new refrigerator, buying it on a 0% purchase card and paying it off by the time the 0% period ends is much cheaper than taking out a loan. Loans under about £7,000 carry interest rates of around 14% these days.

With these credit cards, there is a period of usually 6 to 12 months where you won’t have to pay interest on your balance. However, as soon as the 0% period ends, the interest rate for your balance on that day reverts back to its standard rate, so it’s really only worth taking out this type of card if you feel sure you can finish paying off your balance by the end of the 0% purchase period. When you compare credit cards choose the one with the longest 0% purchase period.

There are several ways to keep yourself out of trouble with a 0% purchase card.

First, keep the credit limit low. Borrowing more than you need is always dangerous.

Second, during the 0% purchase period, make more than the minimum payments, even though you don’t necessarily have to. If you buy something on the card for £900 and you have 0% for 9 months, aim to pay back £100 each month so the £900 is paid off before the 0% offer ends.

Third, don’t miss a payment: if you do, you can lose your 0% deal and be hit with a missed payment fee of £12.

Of course, the most important thing you have to do to borrow this cheaply is to clear your balance within the 0% period.

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Christmas can be an expensive time. The BBC reported that the average cost of Christmas in Wales in 2009 was a cool £784, with a quarter of households planning to spend between £1,000 and £5,000 on their Christmas.

So, if you are looking for a cost effective way to spread the cost of Christmas, why not consider 0% purchase credit cards?

Spread the cost of Christmas with interest free credit cards

0% purchase credit cards allow you to borrow interest free. You typically benefit from a period of between 6 and 12 months where you will pay no interest on the money you spend on your credit card.

Interest free credit cards are therefore perfect if you want to spread the cost of Christmas gifts over several months. You can buy your Christmas gifts now and pay the money back over the next few months without incurring huge interest charges.

Make sure you repay your spending before the 0% period runs out

While interest free credit cards are a great way of spreading the cost of Christmas, you should be careful to ensure that you repay your balance before your 0% period runs out.

If you don’t repay your balance by the end of your interest free period you are likely to pay your card provider’s standard interest rate, which could be between 15% and 20%.

Head online to compare credit cards

When looking for interest free credit cards, the best place to search for your new card is on the internet. With dozens of 0% purchase credit cards available, it is vital that you research your options to find the best card for you.

When you compare credit cards, look for:

• The length of the 0% interest rate period
• Any charges or fees
• Whether there is a minimum limit to qualify for 0% deals (do you have to spend a minimum amount per transaction to qualify?)

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We all want to spread the financial burden of Christmas shopping so that we’re not faced with huge bills due at the beginning of the New Year, and to prevent interest charges accumulating. Try these three tips, and you can make it easier to spread the cost of your holiday purchases.

1. Use a 0% purchase credit card for your holiday spending.

There are a number of credit cards you can obtain at no annual fee that have introductory 0% purchase offers. The 0% time period varies among issuers, so choose one with the longest introductory 0% period. Don’t go crazy with it though! You still have to pay off the charges; you just have a longer time to do so without paying interest.

2. Take advantage of 0% credit cards with balance transfer offers.

Choose a 0% balance transfer card, transfer your balances and don’t use it for other spending. That way you keep it simple by starting with a certain balance and paying it down without adding other charges to confuse things.

3. Most importantly, pay off those balances before the 0% interest period ends.

If you don’t pay these cards off before the 0% interest period ends, you could be in for a shock when the interest rates jump and suddenly you owe far more than you thought.

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The growing strength of the ‘dual hook’ cards, which combine strong 0% promotional periods on both balance transfers and purchases, has had an impact on the popularity of other card sectors.

The obvious casualty has been the straight purchases cards, which traditionally have had just a 0% promotion for new purchases. They were the favourites of the retailers, who normally offered rewards points on the purchases made with the card.

The Amex Platinum Cash back card still offers 0% on purchases for the first six months. However, it is really a rewards card as it offers 5% cash back for the first three months, up to a limit of £100 per month. Pure purchase cards are now virtually extinct.  Arguably, the current Tesco card, which offers a market leading 0% on purchases for 13 months, is still a purchases card, but it also now offers  0% on balance transfers for 9 months, so has a strong ‘dual hook’ feature.

The other, perhaps less obvious sector to be affected is the low rate card sector. Low rate cards do not offer any 0% periods, but instead offer a low rate of interest across all amounts borrowed. They can be a competitive alternative to a personal (unsecured) loan. The best in market personal loans currently offer about 7.6% typical APR (variable and usually on loan amounts exceeding £7,500), whereas the Barclaycard Simplicity card offers 6.8% typical APR (variable) on purchases and balance transfers, and the Halifax Easy Rate offers 6.9% typical APR (variable). If these cards provide a competitive alternative, why have they become less popular over the last 6-12 months?

It may be more attractive for some consumers to take out a ‘dual hook’ card with a strong 0% purchases element (e.g. 12 months), and once this period comes to an end, roll the debt over on to a strong 0% balance transfer card (e.g. 16 months). This effectively gives up to a 28 month interest-free period in which to pay back the loan amount. When compared with paying a minimum of 6.8% APR typical (variable) over the lifetime of the loan on a low rate card, the combination of strong 0% BT deals and strong ‘dual hook’ cards would seem to account for some of the decrease in popularity of the low rate cards.

When the new Consumer Credit regulations come into force on 1st February 2011, it is likely that low rate cards will become more attractive once again. In the meantime, the rise of the ‘dual hook’ cards has had an impact on different ‘other’ sectors of the credit card market.

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Back on 15th July, I suggested that 0% Balance Transfer and Purchases products, often referred to as ‘dual hook’ cards, had gone mainstream. In previous blogs I have been charting the progress of 0% balance transfer lengths over the course of the year. Yesterday, MBNA launched a market-leading 16 month 0% Balance Transfer card and a market-leading 12/12 ‘dual hook’ card.

This suggests that the story of both these sectors remains very much alive. MBNA, and its endorsed brand Virgin, were  active in 2009, maintaining a strong product mix throughout the financial crisis. However, this year they have been far less aggressive, until now.  Perhaps a bit late in the day, it seems that MBNA does not want to be left out in the push for acquisitions before the end of the year, and agrees with other issuers that these are the two most interesting product sectors to focus on.

MBNA has always been known for having high acceptance criteria – only customers with very good or excellent credit scores can successfully apply. So it would also be natural for them to find these two sectors attractive.

Questions remain as to whether the Virgin credit card, currently offering a 14 month 0% balance transfer period will now move closer to the current market-leading threshold of a 16 month period, and whether any other issuers will be prepared to go even longer.

It will also be interesting to see whether any issuers in the ‘dual hook’ space are prepared to breach the current market leading 12/12 barrier and introduce a longer period.

All said, it suggests there will be a few more twists and turns in these sectors before the end of the year.  Based on current trends, it should be good news for consumers as the strong product offerings are likely to continue for a little while yet.

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Here are 5 tips for making the most of 0% balance transfer credit cards:

1. The MBNA selection of credit cards usually have an upfront fee for 0% balance transfers, but they offer these deals to existing customers as well as new customers (who are the primary targets for most 0% balance transfer credit cards). Check out the Virgin, Alliance & Leicester, and MBNA cards for 0% transfer deals.

2. Balance transfer offers generally start on the date the card account is opened, so if you don’t transfer your balance immediately, you’re wasting valuable time at the 0% rate. Plus, some companies say that you have to transfer any balances within 60 days of account opening. If you can, choose a card where you can submit balance transfer details right with the application.

3. It bears repeating: shop around. Compare 0% offers on credit card rather than simply taking up your bank on their offer of a low rate card.

4. Find out if the card you’re considering has a lifetime low interest rate on the transferred balance or whether it is short term and choose according to how quickly you can pay off the balance.

5. New spending on 0% balance transfer credit cards is charged at the typical APR (unless the card offers 0% on purchases too). Furthermore, this debt can’t be repaid until you’ve paid off the balance you transferred (this will change in January 2011 when new credit card legislation comes into effect which says that credit card issuers must put repayments towards the most expensive, rather than the least expensive, debt first). Therefore, interest accrues wildly with new spending. You might be better off getting a separate 0% purchase card for new spending and only using the 0% balance transfer card for paying off the transferred balance.

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