To help consumers avoid Christmas debt, Citizens Advice, in association with Barclaycard, has issued ten tips to keep your finances in shape through the festive period.
1. Plan early for Christmas
Be realistic and budget accordingly. Work out how much you are going to spend on each person and stick to it.
2. Don’t forget the everyday bills
Rent, mortgage, utility bills, food bills and other existing debts still have to be paid over the Christmas period and the consequences can be severe if they’re not. Even though it’s Christmas, prioritise debts such as your mortgage, rent, council tax, gas and electricity.
3. Don’t bank on an overdraft
If you do need more money and risk going over your overdraft limit, speak to your bank first as unauthorised overdrafts can be very expensive and can escalate quickly.
4. Keep things simple
If you can afford to pay for your goods outright by cash, cheque or debit card, don’t be persuaded to take out extended credit agreements unless they really do work out cheaper.
5. Shop around
Try as many different places as possible to find the best price. Be wary of extended warranties – the cost of a repair could be less than the cost of the warranty.
6. Buy safe
Whatever the deal, don’t buy from unauthorised traders or borrow from unauthorised lenders. The initial savings and convenience may prove to be a false economy. Which? also recommends avoiding expensive payday loans.
7. Read the small print
Interest free credit can seem attractive, but if you don’t pay on time, or miss a payment, you could have to pay a lot more. Ensure that the monthly instalments are within your budget before signing.
8. Do your own credit checks
If you are going to use a credit card, shop around and compare terms. Some cards charge high interest rates, but provide interest free periods or discounts. Budget for all these costs and put the payment dates in your diary.
9. Be organised
If you’ve borrowed money, make sure you pay on time, even if it is only the minimum, or you will be faced with additional charges.
10. Start planning and saving for next Christmas
Once Christmas is over, it’s worth planning how you will do things differently next year. This might also be a good time to start saving for next Christmas.
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