WITH 25 December less than six weeks away, many people will have just one or two paydays to come before Christmas.
Unless you have been squirrelling money away, then there's a strong possibility that you may need to reach for your plastic to help cover the cost of the Christmas shopping.
There are some long-term 0 per cent purchase credit cards still availa
ble, but lenders have tightened up their credit scoring criteria. And unless you have a blemish-free credit record, then these interest free deals may not be available to you.
If you're comfortable that your credit record is in A1 condition then you need to get your skates on, as it could easily be a couple of weeks between applying and actually having the card in your hand, especially with the recent disruption of postal services.
If you're looking for plastic that offers interest free borrowing on purchases, take a look at the Tesco Bank Clubcard (0 per cent for 12 months) or the Master Card offers from Sainsbury's Finance or M&S Money, both of which are interest-free for ten months.
If you don't manage to bag a 0 per cent card, then you need to be aware how much extra your Christmas celebrations may end up costing you if you use your existing credit card and don't pay it off in full. For example, if your festive spending amounted to £1,000 and you chose to repay your card balance at £100 per month, it would cost you an extra £88 if your interest rate is 18.9 per cent.
If you are paying a rate of 26.9 per cent the cost would be £127 and at 30.9 per cent the interest bill reaches £147. So while you may not pay too much attention to the interest-charged figure on your monthly card statement, you can see it's quite easy to add an extra 10 per cent or more to your Christmas shopping bill by using an expensive card.
If a shop assistant were to add 10 per cent on to the price of all your purchases at the till, I'm sure you may think twice about buying them. But with the interest spread over a longer period, you just don't appreciate how much over the top you're actually paying.
To get yourself in a position where you don't need to pay interest on your Christmas shopping for 2010, open a separate savings account and set up a monthly standing order to start funding it now. Savings interest rates aren't brilliant at the moment, but at least the bank will be paying you, rather than the other way round.
The most important habit to get into is to start putting some cash away on a regular basis from now to ensure you are in a far better financial position this time next year.
• Andrew Hagger is the head of communications at Money net.co.uk.
