Now is the time to give yourself a card for Christmas. To be precise a
credit card to buy those Christmas gifts and spread the cost over the next six
months or more on interest free credit. Yes, you can borrow the cost of
Christmas and pay it off without paying a penny in interest.
Step 1: Find a credit card that offers you 0% on purchases for at least
six months. There are a couple of dozen of these still around and the interest
free period ranges from six to twelve months. Try
www.moneyfacts.co.uk or – with care –
www.moneysupermarket.com.
Step 2: Are you a good or a bad credit risk? Have you missed payments on
cards, mortgage, overdraft, or monthly mobile phone bill (all bad)? Are you not
on the electoral roll (bad)? Are you not a home owner (bad)? Have you moved a
lot or applied for lots of credit recently (both bad). If you are a bad risk the
cards with the highest APRs are more likely to approve you.
Step 3: When you apply for the card (or as soon as it arrives) set up a
direct debit to pay the minimum each month. That will stop you missing the
payment, incurring a £12 penalty and probably losing the 0% deal.
Step 4: Use the card ONLY for Christmas spending. Do NOT use it for day
to day spending – or treats for you! Do NOT be tempted by a balance transfer
deal. On 2 January 2010 get your scissors out and CUT UP THE CARD.
Step 5: When the statement arrives in January call the card company and
ask which statement you have to clear in full to avoid paying any interest. Work
out the number of months left at zero percent. Divide the total due on the card
by the number of months. Write down that figure. Deduct the minimum payment
(which is made by direct debit) and pay the rest by sending a cheque.
Step 6: Every time a statement arrives do the same.
Step 7: When the final statement of your interest free period arrives
ensure you pay off the whole amount by the due date. Add on days for postal
delays and more days for the payment to ‘clear’. Safest thing is to pay as soon
as you get the statement. Cancel the card.
Well done! You have paid for Christmas over several months interest free!
Magic!