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Christmas shopping on credit card

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Buying Christmas gifts using your credit card is convenient, but you can rack up big interest charges.

However, with loads of 0% credit card offers in the market right now, Christmas on credit could actually make sense - provided you choose the right card.

Say you splash out $2000 on Christmas gifts and spend the next year paying that debt off.

On a typical credit card with a 17% rate, you'll end up paying $144 in interest -- money you can save if you shift to a 0% card instead.

credit card traps

Banks and other financial institutions offer 0% deals to try and attract new customers.

Some will also let you transfer your existing balance, which can help you pay off that debt faster. Used wisely, 0% purchase offers can be a big money saver and make Christmas more manageable.

Right now, there are 44 different 0% card offers available in Australia, with interest-free periods running up to 15 months.

Shifting to one of these deals can help you manage your Christmas budget better, but remember to follow these tips:

  • Compare and find the right card for your needs. While 0% interest can help you save, remember to check other features of the card, such as the annual fee, and compare that to your current deal. Also check for any minimum spending requirements, and examine extra features such as frequent flyer rewards points.
  • Apply soon to cover Christmas shopping. Most card providers will approve you quickly if you have a good credit history, but with Christmas only a month away you'll need to apply soon to be sure of having a card in time.
  • Set a monthly budget to repay those purchases. If you don't pay off your balance during the 0% period, you'll end up paying interest at the "revert rate", which can be 20%pa or more. Make sure you don't spend more on the card that you can pay off during the 0% period, which can range from three months to 15 months depending on the card

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Bessie Hassan is a money expert at Finder.
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