If you want to spread the cost of Xmas over a lengthy period, be sure not to pay any interest. Here's how to get no-cost credit today.
With Christmas Day now less than four weeks away, our Yuletide shopping spree is all set to hit the heights.
According to one estimate, we spend an average of £600 apiece on Christmas gifts and festivities, which is more than many of us can comfortably afford. Hence, millions of people will slap the cost of Christmas onto their credit cards and store cards and hope for the best!
Of course, previous generations viewed 'easy credit' with suspicion, not least because it was quite difficult to come by. Hence, our sensible parents and grandparents preferred to save up for Christmas. Indeed, many started saving for next Christmas as soon as this Noël's festivities were over.
Still, if you are forced to ask Santa for a sub this Xmas, then at least make sure that you don't pay anything for the privilege. The smart option to make full use of the various 0% credit cards on the market, which fall into these three categories:
1) 0% on new purchases
Most credit cards offer a standard interest-free period which lasts for between 45 and 59 days. In other words, if you buy something on your card's statement date and then pay off your next bill in full, you could enjoy almost two months' interest-free credit. However, by spending on a 0% on purchases card, you can benefit from an extended interest-free period which lasts up to a year.
Our top pick in this category is the Halifax One MasterCard, which offers 0% on new purchases for an entire year (plus 0% on balance transfers on payment of a transfer fee of 3%, minimum £3).
2) 0% on balance transfers
While you're on the case, it's a good idea to stop the interest clock on your existing credit- and store-card debts by shifting your outstanding balances to a 0% on balance transfers card. Credit-card issuers are going all out to win new customers through attractive balance-transfer deals, so moving your plastic debts to a 0% transfer offer can mean taking a one-year break from paying sky-high rates of interest.
Several Best Buy cards offer 0% balance transfers for twelve months, including the Virgin MasterCard, MBNA Platinum Plus Visa, Marbles MasterCard and Barclaycard Flexi-Rate Visa, each of which charges a fee of 2% to 2.5% per transfer.
3) 0% on both purchases and transfers
One important rule to remember is that you shouldn't transfer balances onto a 0% on new purchases card, nor should you spend on a balance-transfer card. If you do, you'll pay normally interest on these additional transactions at standard interest rates, typically in excess of 16% APR. Ouch!
However, you can beat the system by opting for a dual 0% card: one which offers a lengthy interest-free period on both purchases and transfers. The top cards in this elite category include the GE Money Transformation MasterCard (0% on both for a year; transfer fee of 2.5%) and the Halifax One MasterCard (0% on both for a year; transfer fee of 3%).
So, there you have it: how to get away with an interest-free Christmas. Then again, don't let these cracking credit-card deals go to your head -- and be sure not to spend more than you can comfortably afford to repay over the next twelve months. Otherwise, instead of a white Christmas, you'll spend December 2007 in the red!
More: Use the Fool to compare credit cards today!