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how to limit your credit card debt at Christmas

Christmas is one of the most expensive times of the year, it is very easy to spend beyond our normal monthly wages to cover additional costs which sees many of us reaching for our credit cards to pay the difference. 

Ideally you want to avoid debt all together when Christmas shopping if possible, but with so many online purchases the norm these days, and ‘tap n go’ and 'paywave' options when out and about, often a credit card will be the more convenient and faster way to pay.  If you do have to use a credit card it’s good to be extra conscious of your spending and have a strategy to make on time repayments. Credit cards allow us the immediate joy of buying while putting off the pain of payment, so can lure us into overspending very easily.

To avoid a large credit card bill in January it’s worth considering the following:

  • If you do need to use a credit card to get through Christmas, start stocking up on gifts and other supplies early to help spread out the costs over a longer time period. This will mean you have more time to pay off your purchases and will make the cost of Christmas easier to absorb.
  • If you have a credit card ensure it has a low interest rate. Keep in mind that store credit cards usually have particularly high rates. If you have several credit cards, consider consolidating your debt onto the one card to make it easier to keep track of money owing.
  • Paying cash is always the most effective way to reduce impulse buying because of the psychology of handing over our hard earned cash makes the payment real.  Consider using a Debit Card over a Credit Card for online purchases.  
  • Set a spending limit and change your shopping habits now before you get into the spirit of the season.
  • Start saving now for the January credit card bill, even putting away just $25-$50 a week will help to take the sting out of the next bill.
  • If you are still paying off last year's purchases, then something has to change.  You need to reduce this year's spending, let family and friends know you are keeping it simple this year and having to stick to a budget.
  • Aim to pay off your Christmas shopping debt in three to four months, to minimise interest costs.

One of the best ways to avoid using a credit card over the silly season is to be prepared well in advance and have a savings strategy throughout the year especially geared to tackle this time of year.

Endeavour has created a product with exactly this in mind. The Christmas Club Account allows you to build savings over the year so that when it comes time to buy gifts, that big ham or pay for the week away on the coast, you’ve got the funds already saved. A Christmas Club Account encourages you to avoid overspending on your credit card as you have access to the lump sum you’ve saved up especially for Christmas spending. The best thing is that the funds are available in plenty of time to do all your Christmas shopping, but for most of the year the money can’t be spent. It might be too late this year, but if you don’t already have a Christmas Club Account, now is a great time to open one, so that this time next year you’ll be laughing (instead of cringing) all the way to the shops and back again.

Exchanging gifts with loved ones is one of the pleasures of life, but if possible aim to do so within your means. A less expensive Christmas doesn’t have to result in people missing out, or someone being ‘The Grinch’. Being careful with your spending and more conscious of each purchase will allow you to appreciate what’s important. Without the worry of money woes you’ll be more relaxed and happy, and you can focus on creating enjoyable memories of the Christmas holidays with your loved ones.

Alison Gallagher is a freelance writer, resourcefulness expert and entrepreneur. She has been featured in various publications including Stellar Magazine, Australian Health and Fitness Magazine, and Cleo Magazine. Alison is particularly passionate about sharing practical tips on how to live simply, sustainably and seasonally.