As the festive season approaches, Britons are once again facing a rise in living costs while being lured by Christmas marketing.
With the added challenge of budgeting in an era of inflation, many may feel a familiar pull towards their credit cards to cover holiday spending. However, according to a 2024 survey by The Money Charity, UK households now hold an average of over £2,400 in credit card debt.
While some may see these tools as essential for navigating these expenses, effective management is key to preventing New Year’s debt woes. Here are some tips to help you along the way.
Set a realistic budget
Begin by calculating your total available funds. Next, outline all anticipated purchases, including gifts, travel, food, decorations and potential outings.
Consider using apps or Excel sheets to track costs. When shopping for presents, be sure to implement a spending cap per person to stay within the allocated price range.
Use reward points
Some cards give cashback or points redeemable for discounts on purchases. Check your rewards portal to understand how you can use these benefits for the upcoming holidays. Often, you get vouchers, which could cover a portion of your gifts.
This is also a good opportunity to consider providers who offer accelerated bonuses for certain categories, such as food or travel, if they align with your habits.
Avoid impulse buying and stick to your plan
The compulsion to make spontaneous decisionsduring Christmas is real, especially with sales around every corner. However, impulse buying can quickly derail even the best-laid plans. Stick to your budget by creating a list and strictly adhering to it.
To resist your impulses, shop online where possible tocompare prices and avoid in-store temptation.
Make repayments swiftly
Making timely payments on your credit card aroundthe holiday season can help you dodge unnecessary charges. Consider setting up a reminder or an automatic transfer through your bank. This may prevent penalty fees and a potential ding on your credit score.
Take advantage of 0% interest offers
Some providers offer 0% interest on purchases for an introductory period, which can be helpful during this time of year. You’ll just need to be clear about when the promotional period ends, as any remaining balance after this date will start accruing additional fees.
These tools can make it easier to manage costs across several months, giving you breathing room throughout Xmas. However, plan accordingly to ensure you clear the debt before the interest kicks in.
Final thoughts
Christmas spending doesn’t have to mean racking up hefty bills. By using the tips above, you can enjoy thefestivities without compromising your finances in the new year.
