When you see the New Year bills, it’s time that you realize you seasonal overspending.
The post Christmas bills will be arriving soon and the cost of Christmas debt can be heavy. If you used your credit card for Christmas and ran to the January sales, now need to have a hard look on your finances. Let’s have a look at some ways to manage the cost of Christmas debt:
Look For New Deals With 0% Interest
Conducting a transfer of balance is a clever way. There are many cards available in the market that offers zero percent interest rate on balance transfers with deals for more than 2 years. The benefit you gain from transferring balances is that your payments are used to clear your balance outstanding. However, such credit cards charge fee from the customers as a percentage of moved debt and it varies from card to card. So transferring you balance to an account with better interest rate is a smart move to manage you cost of Christmas debt.
Consolidate Your Debts with A 5.2% Personal Loan
If you are facing debt issues and have dues gathered in different cards, consolidate them so that you need to manage a single lender. If you can get a personal loan of a lower cost, monthly payments can reduce and cost of Christmas debt can be reduced.
Right after Christmas, interest rates are cut down by the Tesco bank. Even Nationwide reduced its rate to 5.9 percent recently. Moreover, Co-operative bank also reduced the loan rates, starting from 5.4% for Privilege Premier current accounts and 5.6% for others.
However, such attention grabbing interest rates are only offered to the applicants who have a clean credit record. For others, the companies will be charging more.
Remember that before you apply for a personal loan, analyze your situation and see if it’s the right decision.
Borrow At 12.7 from a Credit Union
The only UK financial institutions that offer not more than a 2% interest per month are the credit unions. Various credit unions charge only 1% with a 12.7% APR. For instance, Camden plus credit union offers 9.4% on loans from £150 to £3,500. It also depends on your credit rating and the amount you want to borrow.
There would be no hidden charges and penalties on credit union loans. In fact, you get a life insurance without extra costs.
Switching To a Better Current Account Can Earn You 3% Interest
- Halifax has started offering customers £100 in cash without any overdraft fees for 1 year and soon more banks will join the tussle.
- For people who can keep their current account in form of credit and hardly get irresponsible, they can get a good interest rate. Considering the reward current account of Halifax where you will pay at least £1,000 monthly, Halifax will credit the account with a £6.25 gross amount. However, if you wish to get reward payments, you have to get more than two different debits on your account and also must stay in credit.
- In credit interest and cash back is offered by the Santander’s 123 current account with a monthly fee of £2 along with monthly of more than £500 with more 2 or more direct debits.
- For the customers with ‘Wantage” option with their current accounts, Bank of Scotland and Lloyds TSB pay to their customers almost 3% which adds up to £148 yearly. This rate if offered on balance from £3,000 to £5,000. Adding Vintage to the account can be applied for.
- For using an overdraft facility often, you should find the best deal. You might want to switch if you find a better deal.
- Halifax has an appealing offer and new customers are offered to pay no fees for a year despite having an overdraft. Such an offer can help you a lot with the cost of Christmas debt.
- By the First Direct, customers are given a formal overdraft on of £500 on opening an account. Their overdraft rate is 15.9% EAR. Included in the £500, £250 is the interest fee. It offers its customers additional advantages by providing a payment of £100 to customers who will switch to its 1st account. It also needs you to pay monthly at least an amount of £1,500 and you would be charged with zero interest of your credit balances.
- In the meanwhile, Smile customers are offered a one-year free overdraft with a fee of £500. The Flex Account offered by Nationwide comes with a 3-month 0%interest overdraft. Its Flexdirect account offers 3month overdraft with no fee. However, both these accounts work in different ways. The Flex account offers 18.9% EAR as the overdraft rate where as the Flexdirect account offers you overdraft facility of everyday and is capped monthly at £20
- Lastly, Santander’s 123 current accounts highlights the above and offers you an overdraft for free for 4 months if you switch to use its service and it charges daily fee of £1, capped at a £20 each month. You should consider such options to manage the cost of Christmas debt.