Ways to spread the cost of Christmas

Simon Ward
by Lovemoney Staff Simon Ward on 04 October 2013  |  Comments 3 comments

A bit of planning can ensure you don't have to resort to panic borrowing to pay for Christmas.

Ways to spread the cost of Christmas

There’s a couple of months to go before Christmas, but if you’re feeling cash strapped it’s not too late to find a way to spread the cost for free. Here are some options.

Budget

First up, draw up a budget and stick to it, even though it may be tempting to spend more.

Buy your shopping in stages

It sounds obvious but spreading your Christmas purchasing over a few months means you're less likely to need to resort to borrowing. It all means you'll avoid the last-minute temptation to overspend.

Set up a savings account

It's not too late to put some money aside. You could opt for a bank or building society savings account. Or the likes of Tesco, Sainsbury's, Asda, and the Post Office all run Christmas savings schemes. Be aware that with the supermarkets you'll have to spend the money on the card in store.

Asda's Christmas Savings Card is worth a look if you shop there, as it pays a bonus if you save above a certain level.

Take out a 0% purchases credit card

You can currently pay back your spending interest free for up to 18 months with a 0% purchases credit card.

But, before you start applying, here’s a word of warning: don’t forget to pay the minimum repayment every month or you’ll risk losing the 0% promotional rate. And try your best to pay off the card balance in full before the introductory period disappears or the far higher typical APR will kick in. If you don't think you'll manage that, make a note in the diary that you'll need to transfer the remaining balance to a 0% balance transfer card at that point.

The table below shows the current top deals for 0% on purchases credit cards.

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15 months

15.9%

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In-store credit

Some shops, typically big furniture retailers, offer interest-free credit, where you pay no interest providing you pay off your purchase over a set amount of time.

However, miss a payment and you’ll find you’re hit by high interest charges, typically higher than on a credit card. And shops may also try to sell you expensive insurances, such as payment protection insurance, that are usually full of exclusions. Don’t be reeled in by a sales pitch if it’s something you really don’t need.

Read more in In-store credit: pros and cons.

Instalment plans

Many nationwide second-hand shops, such as Cash Convertors and Cash Generator, offer instalment plans. You pay a deposit on an item (usually 20%) and then pay the rest off in equal weekly instalments. Be aware that these shops can charge more for products than you would pay for them elsewhere. And don’t be seduced by additional offers of credit such as payday loans or cash advances as these can lead you into debt very quickly.

Store cards

We’re not fans of store cards here at Lovemoney, as they charge much higher interest rates than credit cards and usually don’t offer interest-free periods.

There are some exceptions, such as the Argos card, which offers an interest-free period if you pay off a big purchase within a set period of time.

But generally store cards aren’t a way to spread the cost; they are actually a quick way to get into debt if you can’t pay off your shopping at the end of the month.

Borrow from family and friends

If you're able to, you could borrow some money from a family member or friend and pay it back in instalments. But while this may sound the most appealing of all the options listed here, remember that you will need to pay them back. Owing someone money can very quickly sour the closest of relationships.

For some tips on how to avoid that situation, read Borrowing money from family and friends: how to do it right.

Avoid these…

While most people like to spend a bit at Christmas, it isn’t worth getting into serious debt. Payday loans, unauthorised overdrafts and doorstep lending come at a very high price. Borrowing money for the short term and then not being able to repay it is a recipe for disaster and a very unhappy New Year. For more on this, read The worst ways to pay for Christmas presents.

Things to remember

if you are borrowing, you need to think about whether you can afford to repay your debt. If you take out credit and end up missing a payment or going over an interest-free period, you’re going to start racking up interest charges.

Plan ahead for next year now

If you've found it hard to spread the cost of Christmas this year, try to plan ahead for next year now. If you can, put some money away in an instant access savings account or regular savings account. If you can leave the money alone until next Christmas you should find it's earned a little bit of interest on top.

This is a classic lovemoney article that has been updated

More on Christmas

How to cut your Christmas travel costs

How to have a cheaper Christmas

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Comments (3)

  • Mike10613
    Love rating 626
    Mike10613 said

    Has Lovemoney gone all American? In UK English Instalment has one l. Installment is something different:

    The act of installing; installation.

    Take oaths from all kings and magistrates at their installment, to do impartial justice by law. Milton.

    I am spreading the cost of Christmas and the shopping by buying a few things now. I added more beer to my stock today. I looked at the price of the free range, organic turkeys - I won't be having one of those. I can't see the geese at the local lake being safe this Christmas... ;)

    Report on 19 November 2012  |  Love thisLove  1 love
  • electricblue
    Love rating 769
    electricblue said

    Our little town has so many Eastern Europeans that there is no wildlife of any traditionally edible species left in any of our numerous small lakes and waterways. It took a few years for them all to realise that their hunting forays back home were not quite as acceptable here. Now they just join the general melee in our supermarkets at reduction time, but I can't fault their frugality and enterprise.

    I've been accumulating Christmas gifts all year and motorist friends will all benefit from the bargain screenwash, anti-freeze, de-icer and scrapers I bought in the spring at less than 25% of the price now.

    Report on 19 November 2012  |  Love thisLove  0 loves
  • RMN05
    Love rating 15
    RMN05 said

    Why does Christmas always seem to induce a plethora of advice in November/December about how to spread its cost ?

    Don't people know when Christmas occurs ? Haven't they yet twigged

    it's the same time every year, and that it's more advisable to build up funds in preparation, or spread the expenditure over the months beforehand, if they find it necessary to splurge out more than their usual budget permits. Beats being caught out at the last moment and being forced to think up ways of "spreading" the cost for months after the event and possibly incurring credit costs, which is such a fool's option. There's no obligatory mandate that requires over the top expenditure and rueing ill advised decisions afterwards.

    Oh, the tedium of being worldly wise, the price of which is a "mature" age and the haggard victim of life's experiences.

    Report on 19 November 2012  |  Love thisLove  0 loves

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