Top tips to avoid Christmas credit card chaos

Ausure Scone's tips to avoid Christmas credit card chaosRising numbers of Australians are going into debt to pay for Christmas, research has found. Peer pressure and a lack of planning are the main reasons why more than one in five consumers are borrowing from family and friends or using a credit card or personal loans to fund their festive season, according to a national survey of more than 3400 people by Fair Go Finance.

It also found that almost one-third of Australians are stressed about their post-Christmas finances, with women more worried than men. Presents were the biggest expense, accounting for more than half of peoples’ total Christmas spending, although shoppers were increasingly turning to discount stores such as Kmart and Big W for their Christmas shopping.

Last year’s survey found 16.7 per cent of people put Christmas mainly on credit, but this year it has climbed to 21 per cent.

Here are Ausure Scone’s top five tips to avoid credit card chaos this Christmas:

Stick to a plan

Work out how much you’re going to spend on each person and stick to it. Don’t be tempted by seemingly ‘great deals’ – if you weren’t going to spend the money before you saw the deal, don’t spend it when you do.

Avoid running up your overdraft 

If you need more money than you have in your account, don’t run up an overdraft without talking to your bank first or they will charge you for it. There are other options which may be cheaper, like taking out a small loan.

Pay upfront where you can

If you can afford to pay for your gifts straightaway by cash, cheque, or debit card do so. Don’t take out credit agreements unless they really do work out cheaper. You might think you’re saving money at the time you buy, but it’s no use if you end up paying more in the long run.

Read the small print

If you’re taking out credit to pay for gifts, make sure you check for hidden costs. Always work out the total amount you’d need to pay back and make sure you can afford the monthly repayments before you sign anything. Interest-free credit can be tempting, but if you don’t pay on time, or miss a payment, you could end up paying a whole lot more.

Compare credit deals

If you’re going to use a credit card, shop around and compare terms. Some cards charge high interest rates, but give you interest-free periods or discounts. Make sure you work out what’s the right card for you.

If you do borrow money, make sure you budget for all the costs, put the payment dates in your diary and set a reminder on your phone, so you can’t miss them. Pay on time, even if it’s only the minimum payment, or you’ll end up having to pay much more.