Top tips to avoid Christmas debt hangover
Don’t let the Christmas spirit take over and give you a headache in the New Year.
Every year in January second hand shops are crowded with people selling unwanted, often expensive, presents for cash. We all want to give at this time of year but don’t let the Christmas spirit take over and give you a headache in the New Year. Work out how much you can afford to spend before you start shopping.
- Pay your regular bills first. Rent, mortgage, utilities, food, debts and loans, etc., must take priority.
- Watch out for expensive warranties and insurance premiums. Consider whether these are worth the money. Remember consumer regulations automatically require goods to be of satisfactory quality, durable, and fit for purpose.
- Credit cards can offer protection when you purchase goods costing over Ł100. If you have a complaint against the retailer the credit provider can also be liable. However, do remember, credit is generally an expensive way of paying.
- If you take out finance always check the total amount you will have to repay not just the amount of borrowing. This generally gives a much clearer indication of the real cost than the %APR.
- Some providers offer interest free credit which may seem like a good idea but you need to be careful to pay the full amount before the free credit period expires. If you are even 1 day late you may have to pay interest on the total cost.
- What seems like a good deal can have hidden costs. For example, minimum payments of a `payment holiday` can result in substantially larger total payments.
- Be vigilant when considering store cards. These may seem convenient but some charge interest of 30% per year or more.
- If you can afford to pay for goods outright, don’t be persuaded to take out credit unless it really does work out cheaper or better fits your financial plans.
- Every now and again take time to do a quick `financial health check`. Write down your income (monthly or weekly) and everything you need to spend money on over the same period. Make sure you are able to make ends meet and are not using credit to 'rob Peter to pay Paul'.
- If you think your finances may be getting out of control, seek help from an appropriately qualified independent agency such as Citizens Advice.
- Local Support
- Your Ex