Credit cards that won’t ruin Christmas

By Lauren Leisk, Yahoo!7 Moneyhound Updated December 16, 2013, 9:00 am

The Australian National Retailers Association (ANRA) recently projected Australian shoppers are expected to spend $29.2 billion over the festive season, up 5.4% from 2012

As most Australians juggle this cost with ongoing financial commitments, making careful choices when it comes to credit cards can mean avoiding debt in the new year as well as the added bonus of paying off purchases at a later date.

Good credit card habits at Christmas also free up your cash flow for other holiday spending. From introductory purchase rate offers to the longest interest-free periods and, credit card rewards programs that actually pay off, better credit card management can be your own gift to yourself as well as your family.

And for those underwhelmed with the performance of their current credit cards, Christmas can also be an excuse to look for more features from your plastic.

Know what to look for in a new credit card and how to ensure you can pay back your holiday spending in the new year.

Related: How to stay out of credit card debt

0% Purchase credit card introductory offers

If you anticipate a high rate of Christmas spending, a low interest credit card may suit your patterns. And if you cannot pay off your balance in full or carry additional spending into the next month, you will only be accumulating minimal interest or no interest for introductory offers.

You can use your upcoming Christmas spending as a chance to treat yourself to one of the current deals on low rate credit cards. Some perks can include little to no interest introductory periods and or zero percent on any new purchases during the silly season.

Examples include the NAB Low Rate card offering 0% p.a. on new purchases (limited time) until 1 July 2014 as well as 4.99% p.a. on balances transfers for 6 months .

Similarly the Commonwealth Bank Low Rate MasterCard is offering 0% p.a. on new purchases for 12 months (Reverts to 12.99 p.a.) for new credit card applications online (limited time) until 31st January 2014. Plus you'll get a low 5.99% p.a.for 5 months on debt balances transferred (Cash rate thereafter).

(Rates quoted 3rd December 2013)

If you know you have to juggle upcoming bills alongside your Christmas necessities, your credit card could offer you a grace period to get ahead of your debt.

Related: 10 Ways to budget for Christmas

0% Balance Transfers credit card offers

If you do have existing debts then lowering your interest rate on that debt is the most basic way to save some money. Balance transfer credit card offers are effective for consolidating credit card debt and reducing credit card interest repayments. If you have existing credit card debt and it’s been a while since you paid attention to your credit card housekeeping, some balance transfer cards are currently offering 0% balance transfer rates over a set term.

Examples include St. George Vertigo MasterCard offering 0% p.a for 12 months on balance transfers requested on application (reverts 13.24% p.a) as well as a low 13.24 p.a variable purchase rate.

Similarly, the ANZ Low Rate card is offering 0% p.a. for 12 months on balance transfers (reverts 13.49% p.a.), plus a low ongoing interest rate of 13.49% p.a. on purchases.

(Rates quoted 3rd December 2013)

Compare balance transfer offers and ensure you take other features of a card into consideration including annual fees, interest rates on purchases and the balance transfer revert rate.

Related: How to transfer credit card debt & get ahead

Smart credit card repayments

If you have taken advantage of a balance transfer card to lower interest or a credit card with a low interest introductory offer, set an automatic repayment schedule that ensures you pay off all or most of the debt during your lowest interest period. Don’t rely on paying the required minimum that may not pay down your principal balance. Do your own calculations and set your own targets.

Credit card rewards that count

Christmas is the perfect time to choose a credit card with the best rewards program for your own habits. If you need kickbacks that pay off immediately, look for rewards in fuel, food and other necessities. Avoid rewards that are out of reach and realise the benefits sooner.

If you are interested in frequent flyer credit card programs, ensure you choose the right card that suits your spending so you can achieve your target number of points.

Related: Common credit card myths debunked

Avoid the most common credit card interest traps

Make sure your 30, 45 or 55-day interest free applies before purchasing. If you haven’t paid off last month’s balance, these offers can be void and you may have bill shock coming.

Be sure to check if payments made on the first day of your credit card statement period have the same interest-free period as those made a few weeks in. Take note of when your periods start and finish rather than the date you make purchases.

Holiday spending is inevitable and often brings a lot of joy to families. Monitoring your credit card habits will ensure that joy continues into the new year.

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