It’s Christmas – I need credit

Learn how to use your credit card like a champ this Christmas and avoid the dreaded Christmas shopping debt hangover.

’Tis the season for yuletide cheer, shopping sales and potential credit card debt. Our research from Christmas 2015 revealed that Australian shoppers borrowed a tidy sum of $27.5 billion on their credit cards alone in December, with $3.2 billion dedicated to Christmas gifts.

The average amount owed after Christmas was $1,668 per credit card, and only 65% of cardholders were expected to pay off their credit card bills on time. This means that more than one in three Australian cardholders experienced a “Christmas shopping debt hangover”, taking an average of five months to pay off that balance.

So before you head out to the shops this season and merrily swipe, let’s have a look at the risks and benefits of putting your Christmas spending on plastic. This guide will discuss your options and some key factors to consider, and also provide tips for making credit work for you this Christmas.

What sort of credit card should I get for Christmas?

While all credit cards provide the convenience of funds that you can use to buy presents now and pay off later, not all credit cards are created equal. Many new credit cards now provide introductory offers that can offer you even greater value in the short term. Some of the most popular options at Christmas include:

  • Introductory purchase rate offers. Some credit cards offer low promotional purchase interest rates for an introductory period, for example 0% interest on purchases for six months. This type of offer could give you a six-month window where you can repay your Christmas shopping credit card debt without accruing any interest.
  • Bonus point offers. Many rewards credit cards sweeten the deal by throwing in a mixed bag of freebies when you sign up, including a sizable amount of bonus rewards points. Usually these points are awarded when you apply, are approved and spend a specific amount of money in the first few months. While this type of offer can be very enticing when you have Christmas shopping to do, the benefits are often offset by high annual fees and interest rates once the promotional period ends.
  • Balance transfer and purchase rate offers. Introductory 0% balance transfers and 0% purchase credit cards can be a great option if you carry existing credit card debt. These cards allow you to transfer your existing balances at a 0% interest rate and also offer 0% interest on new purchases while you’re still paying down the debt (a feature which credit cards ordinarily don’t provide). This can translate into substantial interest savings until the promotional period for purchases and balance transfers ends.
Rates last updated July 20th, 2018
Name Product Purchase rate (p.a.) Balance transfer rate (p.a.) Annual fee Product Description
Virgin Australia Velocity Flyer Card - 0% Interest Offer
0% p.a. for 14 months (reverts to 20.74% p.a.)
0% p.a. for 6 months
$129 p.a.
Buy now and pay later with 0% p.a. interest on purchases for 14 months. Plus, 0% p.a. on balance transfers for up to 6 months.
NAB Low Rate Platinum Card
0% p.a. for 9 months (reverts to 13.99% p.a.)
0% p.a. for 6 months with 2% balance transfer fee
$100 p.a.
Enjoy a 0% p.a. interest rate offer on purchases for 9 months and the protection of 7 complimentary insurances including overseas travel insurance.
NAB Low Rate Credit Card
0% p.a. for 6 months (reverts to 13.99% p.a.)
0% p.a. for 6 months with 2% balance transfer fee
$59 p.a.
Receive an introductory 0% p.a. interest rate for 6 months on purchases, Visa Entertainment offers and a competitive $59 ongoing annual fee.

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Naughty and nice Christmas credit card features

These are the pros and cons of putting your Christmas shopping on credit:

Benefits of using a credit card at Christmas

  • Low or 0% interest rates. Getting a credit card with low or 0% interest rates allows you to purchase with your card and pay little or no interest for a set period of time.
  • Bonus points. Some credit card offers can hand over as many as 75,000 bonus points at a time. These points could be enough to redeem a return air ticket worth a few hundred dollars, or even buy some of those pressies.
  • Purchase insurance options. Many credit cards offer insurance covers for purchases, such as purchase protection insurance against theft or damage of items, refund protection insurance and extended warranty coverage.
  • Price-matching services. Some credit cards offer “guaranteed pricing” or “best price guarantees” as part of their complimentary insurance policies. This type of policy can help you get the best price on your purchases by paying you the difference for an item if you find it elsewhere at a cheaper price.
  • Flexible repayments. Doing your Christmas shopping with plastic helps ease cash flow and allows you greater flexibility with money management, which can be very helpful at this time of year.

What to watch out for when using a credit card for Christmas spending

  • Revert rates. It is important to remember that promotional interest rates only apply during the introductory period. The revert rate is the standard rate that will kick in at that point, and it’s usually much higher.
  • Annual fees. Credit cards typically charge high annual fees for their attractive perks, so be aware of what fees you will need to pay once an introductory period ends.
  • Interest-free period terms and conditions. Unless explicitly stated, most credit cards commonly require that your account balance be paid in full to be eligible for interest-free days on purchases. As most people end up carrying a balance, they are often unable to take advantage of this feature. Interest-free days and introductory 0% interest offers also don’t apply for cash advances. Depending on the card, this could mean that buying items such as gift cards or scratchies will attract higher interest charges and fees.
  • Overseas transaction fees. If you do Christmas shopping online with an international retailer, you could end up paying an international transaction fee worth 2–4%. You may wish to use a credit card with 0% foreign transaction fees if you shop online globally.
  • High credit limits. Getting a high credit limit can be bad for your Christmas budget, since the temptation to overspend will be magnified. You could easily end up spending more than you should and paying much more in interest charges too.

Tips for managing your Christmas credit card spending

If you have taken advantage of a credit card offer or plan on using your current card to pay for Christmas shopping, the tips below will help you pay it off and keep costs to a minimum.

  • Have a budget before you start shopping. Budgeting is a fundamental tool for managing your expenses and financial goals. By budgeting well, you can limit your spending and prevent that Christmas shopping debt hangover from occurring.
  • Set a reminder for the end of the introductory period. Don’t be caught off-guard by revert rates and fees. Set one or more reminders to prepare yourself for when the introductory period expires.
  • Make regular payments off your card. Apart from planning a budget, you should also plan your repayments so that you can clear your account balance during the introductory period. Set payment reminders and schedule automatic transfers to help facilitate your payment plan and keep repayments on track, e.g. transfer money every time you get paid.
  • Put your Christmas bonus towards the balance. When the happy time comes for you to receive your Christmas bonus, use some or all of it to pay down your credit card bills so you can save on interest charges.
  • Use reward points to buy presents. If you get sign-up bonus points or already have existing points you can use, redeeming them for Christmas presents can help reduce your expenses and your Christmas debt.
  • Consider a balance transfer. If you’ve already racked up Christmas shopping or general debt on your credit card, consider moving it onto a new card with a low or 0% balance transfer rate. Learn more by reading our balance transfer guide.
  • Consider other payment options. If you’re worried about Christmas credit card spending getting out of control, you may want to consider using a regular debit card or money from your savings account to avoid Christmas credit card debt completely. Alternatively, using a combination of credit and your own cash for Christmas spending can help keep Christmas card debt to a minimum.

Giving gifts at Christmas can be great fun but be careful not to let it create future debt for yourself. By understanding the way your credit card works, and by putting some of this knowledge into practice, you can shop smart and give smart this Christmas!

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Amy Bradney-George

Amy is a senior writer at with more than 10 years experience covering credit cards, personal finance and various lifestyle topics. When she’s not sharing her knowledge on money matters, Amy spends her time as an actress.

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