This piece first appeared in Community Care on 11 October 2007
The text here may not be identical to the published text

 

I hate to mention the word discipline. But that is what it takes to spread the cost of Christmas over several months without paying any interest on the debt. Upside – free money. Downside – being strict with yourself.

It started in America when banks lent people money they couldn’t to repay to buy homes they couldn’t afford...sub-prime…credit crunch etc. As a result the banks here are struggling to make as much money as the £40 billion profit they made last year so they are trying to take a bit more from us. One way is to offer great deals on credit cards hoping we won’t be disciplined and end up boosting – rather than nicking – their profits. But that underestimates the Community Care army. Discipline? Born with it.

Step 1: search the best buy websites for credit cards that offer the longest period of 0% interest on spending. As I write – and it changes every day – you can get 12 months from Capital One and Halifax and nearly a year from MBNA.

Step 2: Apply. You’ll need a good credit rating. As soon as the card arrives ring up and arrange to pay the minimum every month by direct debit.

Step 3: Work out how much you can afford to repay each month until the free credit comes to an end. Multiply that by the number of months at zero percent and – here’s the discipline bit – that’s your spending limit.

Step 4: Use the card for any spending you would normally put on your card and pay delay paying off. Christmas presents, that new outfit, a GPS unit. But only within your overall spending limit.

Step 5: Every month put the monthly payment from Step 3 into a high interest savings account – check the online best-buy sites and aim for more than 6%.

Step 6: When you reach the limit from Step 3 stop spending and cut up the card.

Step 7: Note in your diary when the 0% deal comes to an end and make a note a month before it. On that date call the card company and find out when you have to pay off the account before you are charged interest.

Step 8: Allow for the slowness of the banking system and take enough money out of your savings account in good time and pay off the credit card in full. Cancel the card.

Step 9: Leave the surplus in your savings account. Making your money work is the easiest way of earning extra without working yourself. Magic!

 


All material on these pages is © Paul Lewis 2007