Christmas is usually a time of extra spending, between all of the gifts, functions, food and travel, so it can be all too tempting to charge a little Christmas cheer to your credit card. However, help is at hand: if you’re keen to avoid waking up with a hectic credit card hangover in the new year, follow these tips...
Tip 1: Make a list and check it twice
Ever wandered into a shop with a specific purpose, and then walked out an hour later with four bags full of goodies you never knew you wanted? Part of it is psychological: once you’ve picked up one item and committed to the purchase, you know you have to go through the “hassle” of paying, so you’re more likely to throw in a couple of impulse items on the way to the register. Resist the urge and stick with your list; you’ll feel so much lighter for it.
Tip 2: Pay with fantastic plastic – the other kind
There’s a slight thrill that goes with paying by credit card: you get to walk away with your new goods and you don’t have to hand over any cash, so the whole transaction almost feels like you’re using play money. Paying with cash, on the other hand, is a much more realistic experience. You immediately experience the repercussions of your purchase – ie, less money in your wallet – which gives you a clearer picture of your spending habits.
Tip 3: Lower your credit limit
Do you have a high credit card limit, or an extra credit card that you keep “in case of emergencies”? At Christmas time we tend to get a little busy and stressed, so it can become harder to distinguish between “emergency purchase” and “cocktail dress that would be perfect for my work Christmas party!”. Consider chopping the credit limits right down to the bare minimum so you can avoid temptation. If you don’t have it, you can’t spend it.
Tip 4: Avoid store cards
Around the silly season, many department stores offer interest-free promotions so you can do all your Christmas shopping under a “buy now, pay later” scheme. The catch? Store cards typically have higher interest rates than standard credit cards once the interest-free period comes to an end: in some cases, rates can go as high as 29%.
Tip 5: Be creative with gifts
Rather than spending hundreds or thousands of dollars on countless Christmas presents, organise a “Secret Santa” program with your friends or family, so that each person only has to buy one present. Alternatively, give the gift of time or favours: some ideas might include car washes, hair cuts, babysitting, home repairs, home cooking, gardening or cleaning.
