Well it is that time of the month already for a lot of people. The credit card bill is in. Now is the time that the true cost of all that Christmas spending becomes evident to some people. Over the festive period it can be all too easy to get swept up with overspending. Between buying gifts, buying food and drink, going out for meals and generally feeling jolly it is never really a good time to be using your credit card without a care. However, if you’ve done this then now is the time to be taking defensive action. Instead of just waiting for the credit card interest to start mounting up I want to help you save money with a great credit card deal.
Firstly, with your credit card there are a few rules that you should try and stick to:
Think about your purchase
Do you really need the item that you are purchasing? If you’re being sucked in to buying something just because then now is the time to stop using your credit card. It can be easy to put off worrying about when you’ll be able to pay back the balance, or assume that you’ll be fine but will you?! Will you have another ‘must have’ purchase in the next few months? Will there be an emergency? Something else might come up and before you know it you’re in trouble with your finances and your credit card company are adding on interest and charges.
Keep your credit card for emergencies only
If you have found yourself getting a credit card for emergencies then ensure that it genuinely is. Consider locking it in a lock box and giving the key to another member of your household. You could even give the key to a friend. Having to ask for the key back may keep you from doing so just because you have seen a pair of boots in the sale that you love.
Don’t get trapped in the cycle of paying interest
Often credit cards will start with a fantastic deal. For example you might get 0% on balance transfers for 24 months. This is a fantastic way to save yourself interest over a period of time on larger purchases. However, once this deal has expired you should be looking to either negotiate another deal with the same credit card provider or moving to another deal. Use a credit card comparison tool to help you find the best deal. Being loyal doesn’t really get you far with personal finance companies these days. If you find yourself starting to pay interest, and can only afford to make a small repayment each month, then you won’t get anywhere fast.
Examples of how that interest adds up
A £1000 debt @ 18.9% with a £50 per month repayment will take you 24 months to clear.
In that time you’ll have paid £189 of interest.
A £1000 debt @ 18.9% with a £100 per month repayment will take you 11 months to clear.
In that time you’ll have paid £78 of interest.
A £1000 debt @ 34.9% with a £50 per month repayment will take you 30 months to clear.
In that time you’ll have paid £452 of interest.
A £1000 debt @ 34.9% with a £100 per month repayment will take you 12 months to clear.
In that time you’ll have paid £158 of interest.
Use a credit card comparison tool
As I have already said above I think that using a credit card comparison tool can be a fantastic way to save money with a great credit card deal. There are usually 100s of different deals on offer at any one time. You should consider what type of deal you need. If you have a balance that you are already paying interest on then look for a 0% balance transfer deal with a low balance transfer fee. For example some fees are now lower than 1.5%. This amount would be made back in less than one month when switching from a card charging interest.
Look for cashback deals when applying
If you find a fantastic deal that really fits the bill for you then be sure to look at the cashback websites. TopCashBack and Quidco regularly have cashback on offer when you save money with a great credit card deal.
As always be sure that you are exercising caution when using a credit card. Ensure that you will have the means to pay the card back and always try to pay it back in full each month. If you cannot afford to make the full payment each month then pay as much as you can over the minimum. If you pay the minimum when it is due and then make another payment before the next bill comes out this can help boost your credit score also.