What's the best way to pay for Christmas without ending up knee-deep in debt for the new year?
Christmas is nearly here. Along with dreaming about how many mince pies I can consume I’m also starting to worry about how I’m going to afford buying presents for everyone.
While cutting down my friendship circle would probably be the best way to save some money at Christmas, this isn’t really an option and so therefore I’m tempted to get a 0% purchase credit card to cover all the extra things I’m going to have to pay out for.
However, is a 0% card the best option for paying for Christmas or will it just lead me into debt?
Firstly, before you start your festive spending remember to remain frugal. Making your own presents and shopping around before buying is a good way to cut costs and making a list and sticking to it will help you reign in your spending.
How do they work?
The theory behind 0% purchase cards is you can use them to pay for big events such as Christmas and you won’t pay any interest on the items for a while. Depending on the length of the 0% purchase period this could mean you won’t have to pay any interest for up to 16 months with the current top cards.
During this period you won’t be forced to pay out any interest, but in order to avoid a giant whammy when the initial 0% period ends, you need to start paying the balance off your credit card during this time.
If you were using a normal credit card you’d be paying an average of 18% interest on the balance each month. If you’re not paying this off in full that’s quite a hefty amount of interest you’re handing over to your credit card provider.
Therefore a 0% card can give you a bit of breathing space before you need to pay the whole thing off.
What’s the catch?
As with any kind of credit card, there's always a temptation to go a bit wild. If you know you don’t have to pay off the card for a while there is an even greater risk of this happening.
What you need to remember is you’ll have to eventually pay off the debt and unless you start paying off a small amount each month, you’ll end up forking out just as much in interest as you would have done on a standard card.
As soon as you get the card keep an eye on how much you’re spending, check when the 0% period will end and try and pay off a small amount each month. That way you won’t be hit with a massive bill when the 0% period ends.
The top 0% cards
When looking for a 0% card you really want one with the longest time possible before you need to start paying interest.
For Christmas there are not just the presents to buy but all the added extras such as decorations, meals out, cards and paying for travel to visit family and friends. If you’ve not been setting aside a little each month to pay for this extra cost, you could put everything on a 0% card and then you’ll have extra time to pay it off.
With the top 0% cards you’ll get 16 months so if you opened one in November this would give you until March 2014 before you’d begin to pay interest on the balance. Tesco offers the longest period with 16 months and it also has a balance transfer period of nine months if you’re looking to clear some expensive debt.
Next up is the Halifax All In One card with a 15-month 0% period and a 15-month 0% balance transfer window. However you can only apply for this one online.
Our comparison table has a full range of credit cards to suit everyone and here I’ve picked out those with the longest 0% purchase periods.
The longest 0% purchase deals
|
Credit card |
0% period |
Rate |
Notes |
|
16 months |
16.9% |
Includes nine-month balance transfer period with 2.9% fee. |
|
|
15 months |
17.9% |
Includes 15-month balance transfer period with 3% fee. |
|
|
15 months |
15.9% |
Earn M&S points every time you use the card. |
|
|
14 months |
18.9% |
Includes 14-month balance transfer period with 2.9% fee. |
|
|
13 months |
17.9% |
Includes 13-month balance transfer period with 3% fee. |
|
|
13 months |
17.9% |
Includes 13-month balance transfer period with 3% fee. |
|
|
NatWest YourPoints World MasterCard |
13 months |
17.9% |
Includes 13-month balance transfer period with 2.9% fee |
|
RBS YourPoints World MasterCard |
13 months |
17.9% |
Includes 13-month balance transfer period with 2.9% fee |
|
12 months |
12.9% |
Available to Nationwide current account holders only. Includes 20-month balance transfer period with 3.1% fee. |
|
|
10 months |
16.9% |
Includes 12-month balance transfer period with 3% fee. Earn cashback on your spending. |
Compare all 0% purchase credit cards