Don’t let debt destroy your Christmas

What a year it’s been! This year, it will be easy to over compensate for a tough year by spending too much on presents, entertaining and everything else that comes with the festive season. But if you overspend and go over your credit card limit or don’t meet your minimum monthly repayments it can affect your credit score down the track. And this has consequences.

It could mean a lender denies your application when you go to take out a home loan, for instance. Or it could mean you are charged a higher interest rate when, by following these tips, you could have avoided going over your limit and maintaining your credit score.

There is a lot that goes into Christmas lunch or dinner - crackers, turkey and pudding are just some of the important ingredients. Leaving everything to the last moment can mean you end up paying more than necessary. So start buying some items early so you’re not facing bill shock in the week before Christmas. A simple tip is to try and shop at lower cost options like Costco and Aldi.

Another great way to save at Christmas is to ask different family members and other guests to share the cooking. Even if you do the ham or turkey – or vegan or vegetarian options – ask relatives to bring things like salad and dessert. Spreading the load is a great way to cut your costs.

Allocating one present to each person also reduces the amount you need to spend on gifts. Before Christmas, pull everyone’s name out of a hat and swap names so each person only has to buy for one other person. Encourage people to give their buyer a hint about something they want so people get presents they will use.

We can’t travel overseas right now and many of us can’t even travel interstate. But that doesn’t mean we can’t have a happy holiday. Spend the money you would have set aside for a holiday on other treats like outings or nice meals at restaurants.

Many of us balk at using expensive wrapping paper and ribbon at Christmas that only ends up in the bin. So this Christmas, get a bit creative. Stencil butchers paper that can go in the blue recycling bin. Add some attractive twine and a home-made card for extra flair. Even newspaper with some creative touches like pine and string looks great and is easy on the pocket and the environment.

Just like Santa makes his list and checks it twice, it’s a great idea to regularly check your credit score. You can check it as many times as you like for free with ClearScore. So if you haven’t checked your credit score yet this year, now’s the time to do it.

These are just some of the steps you can take to reduce your costs this Christmas and avoid a nasty shock come January when your credit card bill arrives.