Play the percentage game this Christmas
It is understandable that at this time of year, more than any other, people stretch themselves financially to cover their costs over the festive period. UK households will spend hundreds of pounds on presents and food this year, despite the uncertain economic environment.
For some, this outlay is inadvisable at best, potentially ruinous at worst. Of course, people are under pressure to buy the best (usually meaning most expensive) and most popular presents the high street has to offer, but borrowing to the hilt and playing catch up all year is a hugely dangerous game to pay, especially with the ubiquitous threat of job losses.
That being said, there is a place for short term borrowing, if there is a clear and timely plan to pay it back. If your buying weapon of choice is a credit card then it may be worth considering a 0% purchase credit card. These products are available from most providers and offer 0% interest for a limited period – usually around 50 to 60 days – on purchases.
To take advantage of the cards, borrowers should ensure that they can pay back the full amount owed on purchases in the agreed time, as failure to do so will see a large hike in the rate of interest. As well as not being used as a way of delaying repayments, 0% purchase credit cards are most certainly not the ideal vehicle for withdrawing cash, as most have a whacking rate, bobbing around the 23% to 28% mark.
It is also worth keeping an eye on how long the introductory rate on purchases lasts as a cursory glance at the market suggests anything from three months to twelve months is currently on offer. There is nothing to stop you from switching to another similar product from a different provider once the period elapses, although any outstanding balance will be charged at the new typical APR.
The best way to use these cards is to draw up a strict budget, detailing what you can afford and when the balance of purchases can be paid back. If that time is more than the interest free period, then a 0% purchases card may not be the best option for you. However, if you are confident the full amount can be paid back within the agreed time, then such a product could help you out this Christmas.
The key is being aware and in control of the outstanding balance(s) at all times, rather than letting it get away from you.
Moneyfacts.co.uk is the leading independent financial information provider in the UK. Since 1988, we’ve been providing impartial information to financial services professionals which has helped thousands of customers get the best deal on their mortgages, savings accounts, credit cards, loans and other personal finance products. www.moneyfacts.co.uk Limited is authorised and regulated by the Financial Services Authority (FSA). Article Source:http://www.articlesbase.com/credit-articles/play-the-percentage-game-this-christmas-1579008.html
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