Christmas is expensive, especially if you have kids and there is always the pressure to grab those seasonal bargains around Black Friday and other special events. But it is easy to fall into the trap of ‘buy now, pay later’ and if you don’t manage your credit well, you can end up with a serious credit hangover come New Year. Here are some tips to help you avoid that headache in January.
Understand interest rates
Lenders will always do what they can to make their products look attractive so deals such as 0% interest or no interest if you pay within a certain time can seem enticing. And grabbing these deals can be excellent if you know that you can pay off the amount within the period but if there is any doubt, think long and hard. Look at what you will pay after the zero interest period and what it will cost you in money terms – can you afford this? If not, then don’t give into the temptation.
Don’t get caught up
In the same way as special offers, credit card companies will often offer an increase in credit limits around Christmas time. They want to help their customers at a time of year when they know they will be spending more than normal. But remember that this sparkling increase will have to be paid for – either in full when the bill comes in to avoid interest or as a higher monthly payment. Look at the worst case – if you spend all of the increase, what will the payment be? Can you afford this?
Be selective with bargains
The trend of huge deals on Black Friday and in the lead up to Christmas often seem to offer amazing deals that we can’t miss out on. But take a long, hard look before grabbing that bargain. Do you really need that new TV or is the one you have only 12 months old and doing the job perfectly? Do the kids really need the newest PlayStation console or are they happy with what they have? A deal is only brilliant if it offers something you need – and something you can afford!
Know your credit rating
If you are planning to take some credit over Christmas to help with the costs, then make sure you know your credit rating and understand what this mean. You can check your credit score easily online and this will tell you if you have any problem debts that might stop you getting the credit you want. You can get a free credit check from Experian and others that will give you a clear picture of your financial position to make informed decisions.
You can bag a real bargain around Christmas as some items that aren’t popular are at discounted prices while other popular items are priced to tempt people. But remember that everything you buy has to be paid for at some stage and make sure you don’t over commit and find yourself in financial problems come January.