Australians are expected to spend $27 billion (approximately $2,500 each) on their credit cards over Christmas this year. How much of that spending will be yours, and how much will it end up costing you in the long run?
Discover how you can make the most of your credit card this Christmas
Christmas is the time of giving. Unfortunately, for many of us, it's also the time of handing over that little piece of plastic in our wallets, shutting our eyes and hoping for . But what if this year you got in control of your Christmas spending before it took control of you? It is possible, and it's easy to do — it just starts with knowing what your options are.
What type of Christmas spender are you?
Knowing what kind of spender can help you find the ideal card to see you through the silly season. Read the descriptions below and select the one that fits your needs:
- "I plan to put the majority of my purchases on my credit card over the Christmas period."
- "I don't plan on using my credit card too much — mainly I just want a card for emergency spending."
- "I want to use my credit card for Christmas spending but plan to pay it back in full straight away."
- "I'm planning on going away over Christmas and want a credit card that won't cost me too much to use overseas."
- "I'm a savvy online shopper and plan on doing the majority of my Christmas shopping online."
Buy now pay later: Credit cards with 0% purchase rate offers
A huge concern at Christmas time is being able to afford all the purchases you need to make. Gifts, food and even travel costs need to covered leading up to Christmas day, and this can seriously eat into your holiday budget. Credit cards that come with introductory purchase rate offers let you spend on the card for a set period of time, with any spending that is considered a purchase will not incur interest.
How can these cards help you over Christmas?
- Make purchases and not pay any interest for a set period of time
- Enjoy the other features of the card while you are paying down your debt
- Organise a budget so you have your debt paid off before the end of the interest-free period. This essentially offers you a credit with no interest
- Some cards also let you earn rewards points while you make purchases. This essentially sees you redeem rewards for your Christmas spending, for which you are paying no interest
What you need to know about purchase rate offers:
- The interest-free period on these cards differs. Some cards may offer it for a shorter period, say around three months, while others offer a longer-term period of up to fifteen months.
- You will need to pay the minimum payment required each statement period, which is usually around 2-3% of your outstanding balance. Also, if you have any other outstanding fees or interest charges you will need to pay these as well. These may include annual fees, cash advance fees or rates and outstanding balance transfer amounts.
- At the end of the interest-free period, any outstanding purchase balance you have will start incurring interest. Interest is usually charged daily as per the annual card rate.
Going away this Christmas? Travel without some of the price tags...
Some credit cards can charge you excessive fees when you make overseas purchases. Along with exchange rates you could also be stuck with international transaction fees and cash advance fees that can add up very quickly. If you're in need of a credit card to travel with, and want the low-cost benefits offered by travel debit cards, there are cards that minimise the costs associated with making purchases overseas.
Features you can find with these cards
- No international currency conversion fees or no foreign transaction fees
- Frequent flyer and rewards points for purchases
- Low or no annual fees
Drawbacks of these cards
- Many of these cards have relatively high purchase rates
- Some of the travel cards have annual fees that could negate the money you save
- They tend to be not as 'feature-packed' as other credit cards due to their low fees for international transactions
Get rewarded for your Christmas spending
How does being given something for partaking in the season of giving sound? It's possible with a rewards credit card. The cards offer you points for every eligible dollar you spend on purchases with your card. These points can then be used to redeem a range of rewards with the linked card rewards program, whether that be a frequent flyer program or an independent rewards program offered by the card provider.
These cards are an option whether you're after a premium card or not — even lower cost cards come with rewards programs. Take a look at some of the cards below to see what option might be for you.
What rewards cards can I consider for Christmas?
- $95 annual fee which includes a $40 annual account fee and a $55 Rewards Program service fee
- Earn 0.5 Reward Points on eligible purchases (uncapped) until 5 August 2017. After that time, you'll earn 0.5 Reward Points per $1 spent on eligible purchases up to $2,000 per statement period, then 1.5 Reward Points per $1 you spend on eligible purchases above $2,000 per statement period.
- Earn 1.5 reward points per dollar spent
- Purchase rate of 18.79% p.a.
- International travel insurance, purchase security cover and extended warranty insurance
- Competitive annual fee of $89
- Earn 2 points for every dollar you spend. This is in addition to flybuys points
- You'll be charged a rate of 19.99% p.a. for purchases and cash advances
- Free delivery on Coles Online for purchases over $100 and zero liability on purchases
- Earn 3 Membership Reward Points per dollar spent at major supermarkets and 2 points per dollar spent at major petrol stations. For other purchases you'll earn 1 point for every dollar spent and 0.5 points per $1 on all utilities, telecommunications, insurance and Government bodies
- You'll be charged an annual fee of $195
- Enjoy a complimentary domestic return flight every year as well as complimentary travel insurance
- Enjoy a low annual fee in the first year and $169 thereafter.
- Make an eligible purchase within the first three months and you can enjoy 40,000 bonus Acquire points.
- These points are worth a net value of $770.
- You can enjoy these benefits for a $150 annual fee.
Credit cards for the online shopper
Looking to take advantage of competitive prices from international retailers? There's credit cards that can help keep your online shopping costs down. Similar to travel credit cards, these cards offer low or no foreign currency conversion fees. Other cards you might want to consider include those offering extended warranty, merchandise protection, and also those with interest-free offers in place.
What are some of your options for online shopping credit cards?
Premium card perks: Take advantage of what's on offer
Platinum, gold and other types of premium cards can offer a host of benefits to frequent travellers and shoppers. Most banks and card providers offer a premium range of cards, or have at least one premium card options available. While these cards usually offer a range of lucrative perks, keep in mind that the rates and fees on these cards are generally quite high. Weigh up the cost of the card against the possible benefits you can receive. Some perks that these cards offer include:
- Complimentary insurance covers. These can include complimentary travel insurance, extended warranty, purchase price protection, rental vehicle excess and domestic flight inconvenience cover.
- Linked rewards program. Many cards come with a rewards program through which you can earn points for purchases. The rewards program may be a stand-alone program offered by the card provider, or it could be linked to a frequent flyer program. The card will come with a set earn rate, which tends to be more lucrative on premium cards.
- Bonus points. If your card is linked to a rewards program you may find yourself able to earn bonus points. This may be awarded to you when you sign up to the card, given to you through spending with rewards partners, or by meeting a certain spend cap in the first few months of having the card. Some cards can see you awarded up to 80,000 bonus points.
- Additional cardholders. Share the benefits of your card, and if you are able to earn points, earn them from your additional cardholder's spending. Some card provider's allow you to add up to nine extra cardholders to your account.
Credit cards to cover emergency spending
Not everyone needs a credit card to see them through Christmas. If you think you might fall into this category, but still want a credit card just in case, you might want to a consider a 'no frills' type of credit card. These cards come with minimal features but are also low cost. This means you can keep them to use should you ever need to, and they won't burn a hole in your back pocket in the meantime. When you're looking for a credit card for emergency expenditure, you'll want a card that has:
- No annual fee. Why pay a fee for a card you might not use?
- A competitive purchase rate. This doesn't have to be the lowest rate, but it just needs to be competitive. Compare rates across a range of no annual fee cards to find competitive rates.
- Easy to manage features. See if the card is widely accepted to make purchasing easy should you use it. You can also see if the card provider's products have gotten good reviews from customers online.
Christmas hangover: Dealing with credit card debt
Try as you might, spending more than you intended is easy to do, and it can happen to anyone. If you find yourself starting the new year with less than a fresh start, you might want to look at the different strategies available to you for dealing with credit card debt.
A balance transfer credit card can help you pay down your existing credit card debt by offering you low or 0% p.a. for a set period of time. When you apply for a balance transfer credit card, you can also apply to bring over a balance from one or more credit or store card accounts.
Things to keep in mind:
- You usually can't take up your entire credit limit with a balance transfer. Card providers usually allow you to take up 70-95% of your approved credit limit with your transferred balance
- There may be a balance transfer fee
- Following the end of the balance transfer period, a revert rate will be applied to any outstanding amount. This rate usually reverts to the cash advance rate, which is quite high, but may also revert to the purchase rate
Use the table to compare balance transfer credit cards below. Click 'more' to see if you are eligible and read a review of the card. When you're ready to apply, just click 'go to site'.