Spread the cost of Christmas with a 0% credit card

In the run-up to Christmas it may be daunting to think where the money to fund it will come from. Paying via credit card may be a necessity or something that you'd prefer to avoid due to the sting of interest rates.

However, there is no need to get into financial trouble as with a little shopping around the right credit card deal for your situation may be out there. It may even prove to be a more cost-effective option than a loan if used correctly.

Spread the cost of Christmas

If you need to ease the burden of Christmas expenses then you may want to look out for credit cards that offer an interest-free period on purchases.

As an incentive to switch providers, many card companies offer 0% credit card rates for balance transfers or purchases for a period of time.

If you don't pay off your balance each month, you could save money by switching to a zero-interest period for balance transfers.

These credit cards offer zero interest for a specified period. Some of the promotions last for around six months, although there are some which offer promotional rates for nine months or more.

If you're carrying forward a balance on one or more credit cards and being charged interest for the privilege, then you may want to consider switching the debts to a lender offering an introductory interest-free balance transfer credit card.

By switching to a 0% credit card and paying off as much as you can every month, every penny that you pay during the interest-free period will go towards paying off your debt.

Some issuers even allow you to transfer other types of debt, such as overdrafts and loans, to a 0% deal.

One card worth considering is the Halifax All in One card which is interest-free on both purchases and balance transfers for nine months.

The interest-saving offers on this card include 0% for the first nine months on purchases, which could potentially help you to spread the cost of Christmas.

It also offers the same rate for the first nine months on balance transfers made in the first 90 days - although a 3% fee applies - meaning that transferring existing amounts owed could save money.

Holders of this credit card must pay at least the minimum payment on time every month and stay within their spending limit to retain the promotional rate.

Other cards on the market include the Virgin Money MasterCard (run by MBNA), offering 0% for 16 months (with a 2.98% fee), and the Santander MasterCard, which is offering 0% for 15 months (subject to a 3% fee).

Risk of being disadvantaged?

If you're already owing large amounts of money then having pay a 3% fee may seem unattractive. However, avoiding the sting of interest rates may mean that the initial outlay is worthwhile.

All 0% interest means is that there is no cost to the borrowing but it still needs to be repaid. So be careful of making your repayments as the interest rates will increase after the initial period or worse still the 0% deal could be stopped, leaving you to pay the higher rate.

You should ensure you make at least the minimum repayments to avoid being fined, or worse still having the 0% deal closed down meaning that you will have to pay the higher standard rate.

The best advice may be to ensure that at the end of the 0% period for the rate you have cleared the card or are ready to make the switch to a new card with a 0% balance transfer deal. If you can afford to pay off the full amount in under a year or are willing to switch then this may be your best option financially.

Of course, if the debt still remains once that deal expires you are entitled to be a rate tart and switch again. But to be able to do this you need to be aware of your credit rating.