The Christmas Credit Card Temptation
9 December 2003
The Christmas Credit
Card Temptation – how to avoid
overindulging this year
Every year it happens, people feel pressured to provide at Christmas and many load up their credit cards more than usual. The result sometimes means starting the New Year on the back foot, and spending the next few months paying for fiscal overindulgence.
“Credit Cards are a very useful means of payment, but overindulging in their use can, for some, go hand in hand with the other excesses of Christmas, says Barbara Chapman ASB Bank’s Head of Retail Banking and Marketing
ASB Bank reveals some timely tips on using credit cards wisely in the Christmas season to avoid having too much of a ‘credit hangover’ in January.
New Zealanders’ responsible approach to credit card spending and repayment continued in 2003, according to ASB Bank’s customer behaviour and a recent report by Visa.
“ASB Bank has experienced a 172% increase over four years in the number of credit card retail transactions (excluding cash advances) so it’s important at this time of the year that our customers are reminded about sensible credit card practices” she says.
Last year, credit card spending made up approximately 25% -30%* of the Christmas shopping figure, about the same as the previous year.
“On the whole customers control their credit card spending very well, and more than half our customers take advantage of the up to 55 days free credit our credit cards offer and don’t pay any interest at all,” she says.
“Credit cards which offer up to 55 days’ interest free on purchases provide a low cost and convenient means of doing the Christmas shopping.
According to a recent report by Visa, 70% of credit card holders clear their Christmas spending debts straight away or within a month.
“By following some simple, guidelines, credit cardholders can manage their finances better, and improve their budgeting and forward planning ability to get over financial humps such as rates and insurance bills”, she says.
“Some simple boundaries to set for using a credit card wisely at Christmas, or any time of the year include:
- Establish a budget and stick to it. Use your credit card as a short term financial tool to help smooth out some of the financial humps;
- Know your spending limit – and aim to pay back as much as you can by the next due date on your statement. Don’t miss a monthly payment. Note your payment date in your diary or calendar, or set up an automated payment facility;
- Rewards schemes are attached to many credit cards and can provide valuable benefits including gift vouchers in recognition of card spend. However, do not exceed your planned budget/spending limit simply to earn rewards points;
- Cash advances should only be used for emergencies as they attract interest as soon as you receive the cash;
- Use a credit card that is right for you. Interest rates differ, fees differ, and not all banks offer up to 55 days free credit;
- Stop using your credit card and seek help if you are finding it hard to manage your credit. Contact your card provider or a credit counselling service.”
* According to figures released by Paymark EFTPOS and a recent report by Visa.