Start preparing for Christmas
For many people, it may come as a bit of a wake-up call to discover that there are now fewer than 4 weeks or so until the big day.
In most cases, this means there’s only one pay packet left between now and 25 December. With this in mind, it might be worth putting a little money aside to help cover the costly festive season. And, much as you might shudder at the thought, now is also the time to think about your Christmas shopping.
New findings from Halifax reveal the average person spent around £469 on Christmas last year, including all gifts, food, drink and socialising. Worryingly, one in four consumers said they still had Christmas payments outstanding at the start of February this year, with many expecting the festive hangover to drag through until April.
Cash in on cashback card deals
If you’re planning on putting Christmas shopping on a credit card this year, you need to carefully choose the right piece of plastic. Andrew Hagger, finance expert at MoneyComms, says: “It might be worth taking out a cashback card so you get something back on your shop. With the American Express Platinum Card you get 5% cashback for the first three months, after which the rate is 1.25%, while the Santander 123 Credit Card MasterCard offers up to 3% cashback on certain categories of spending.”
Note, however, both cards come with an annual fee. With American Express it is £25 and with Santander, it is £24 (rising to £36 in January 2016).
Also bear in mind cashback credit cards are only advisable if you are incredibly disciplined and can afford to pay off the balance every month. If not, the hefty interest charged could soon wipe out any cashback rewards.
Make use of reward cards and loyalty points
There are also credit cards that offer rewards or loyalty points that can be used to save money in the run-up to Christmas. Damien Fahy, finance expert at Moneytothemasses.com, says: “With the Tesco credit card you earn one Clubcard point for every £4 spent at Tesco, and can redeem the points at any time, meaning you can use them now to reduce your Christmas food or shopping bill. In addition, Tesco allows you to quadruple the value of your rewards via its Clubcard Boost Scheme.”
Other top picks from Fahy include the Sainsbury’s Nectar no-balance-transfer- fee credit card and the M&S credit card.
Meanwhile, don’t forget to use accrued loyalty points to reduce the cost of your Christmas.
“A recent survey suggested that Brits have around £4.5 billion worth of unused loyalty points with Tesco, Nectar and Boots,” adds Fahy. “Make sure you check whether you have any ‘forgotten’ points, which you can use to buy gifts.”
Credit cards offer additional protection
emember that if you use your credit cards for Christmas purchases over £100 and under £30,000, you benefit from an extra layer of consumer protection under Section 75 of the Consumer Credit Act 1974. This means if you have problems with goods or the retailer goes bust, you will be able to reclaim a refund from your card provider.
Coupons and vouchers
Before hitting the high street or shopping online this Christmas, it’s worth looking out for discount codes, coupons and special offers.With a site such as Extreme Couponing (Excoupuk.com), for example, there is an extensive range of savvy buys, ranging from groceries and gadgets to the latest toys and homewares.
Emma Mumford, founder of Extreme Couponing, says: “Now is the time to start emailing companies you shop with the most to give them an honest review of why you love their products – and how they compare to rival brands. This is free product research, and firms will often reward customers with higher-value coupons.”
Other useful voucher sites include VoucherCodes.co.uk and Savoo.co.uk.
Also make the most of cashback sites, such as Quidco.com and TopCashback.co.uk, when buying presents and other festive goodies, as these sites enable you to earn cash as you shop.
Steer clear of store cards and rip-off catalogue deals. While the offer of a juicy discount for opening a store card may sound appealing, you need to tread very carefully. Fahy says: “These cards are often mis-sold, and charge extortionate interest rates, with some approaching 30%.”
In September, Argos, Burton and Miss Selfridge were named and shamed as the worst offenders, all charging 29.9% APR. Next charges 24.99% APR. By comparison, Lloyds Bank, Bank of Scotland and Halifax all offer credit cards with a 6.4% APR, and they let you spend anywhere, rather than just with the issuing retailer. “My advice would be to steer clear,” says Fahy.
The only exception to this is if you can be extremely disciplined after snapping up the introductory discount, and pay off the card immediately. That way, you can take advantage of discounts worth up to 20% without paying a penny in interest.
Many catalogue companies also offer easy credit, which can seem tempting. But, once again, this comes at a steep price. “You could face interest rates as high as 58.7 % with Fashion World, 39.9% with Very, and 34.9% with Lookagain.co.uk,” warns Fahy. “I would give these retailers a wide berth, as if you do buy products, you could find you are still paying off this year’s purchases come next Christmas.”
If you are expecting to do a lot of shopping online this Christmas, it may be worth signing up for Amazon Prime. “There is an annual charge of £79 but this gives you free next day delivery,” says Fahy. “That said, you would need to purchase 13 items a year to make the service pay for itself.” However, the service does include unlimited TV and movie streaming, so if you’re likely to use that too, you may decide the fee is worthwhile.
Equally, if your total purchase is worth more than £20, you will qualify for free delivery anyway. This does take three to five days, so will require a bit of planning but means you won’t have to fork out £79.
“As an alternative, consider taking out the free 30-day Amazon Prime trial and ordering everything you need in that time before cancelling,” adds Fahy. As prices fluctuate on Amazon, it is worth logging on to Camelcamelcamel.co.uk to track the price of items so you can see the biggest price falls on items over time.
Another useful site is Flubit.com, which you can use to beat the price of items on Amazon by diverting orders to other UK retailers. Simply enter the Amazon link to the product you want, and Flubit will find the same product at a cheaper price.
This year’s hottest toys
This year’s list of ‘top toys’ is once again dominated by toys inspired by TV shows and films.
Favourites include the Sing-A-Long Elsa, the Thunderbirds Interactive Tracy Island, and plenty of Star Wars toys. But parents are being warned to be on their guard before buying toys online.
Tony Neate, chief executive of Get Safe Online, says: “For most busy parents, going online is the best option. However, this pressure to find the best gift at an affordable price can lead people to buy fake or non- existent goods from dodgy sites.”
Last year, hundreds of fake Frozen dolls imported from China were seized by trading standards officers before reaching shops. Tests showed the toys contained a hazardous banned chemical that is harmful to children.
Neate adds: “The golden rule is that if an online deal seems too good to be true, it probably is. Sometimes, at Christmas, we can be so focused on getting the perfect presents that we miss the obvious warning signs and fall victim to an online scam.”
If there are no reviews and you haven’t heard of a seller, do some research before you buy. Keep an eye out for mis- spellings on the packaging or the absence of a logo, such as Disney’s. This could be a sign the product is a fake.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.
Cashback credit cards
These reward you with a small percentage of cash back on your total spend on the card, either each month or annually. Cashback cards carry high APRs and ONLY work if you pay your balance off in full every month. If you miss payments and have existing credit card debts, leave these well alone.
This is used to compare interest rates for borrowing. It is the total (or “gross”) interest you’ll pay over the life of a loan, including charges and fees. For credit cards where interest is charged at more frequent intervals, the APR includes a “compounding” effect (paying interest on interest). So for a credit card charging 2% interest a month (equating to 24% a year), the APR would actually be 26.82%.