With Christmas just around the corner, you may have thought about starting (or even started) buying your gifts.
Now, we can understand that you’re probably not ready to put the tree up quite yet, especially with Halloween still yet to come (although Black Friday is a little over a month away!). But, if you’re thinking of starting your shopping early and using a credit card to help you spread the cost, now may be the time to apply.
Spread the cost of Christmas
Starting your Christmas shopping early certainly has its benefits. You can avoid the hectic Christmas rush and spread your spending over a couple of paydays before the festive season arrives. This can make your spending more affordable.
Another way to spread the cost of Christmas is to use a credit card. Using a credit card, you can pay for your purchases and then pay this back in manageable monthly instalments. And, depending on the credit card you choose, you may be entitled to a 0% interest period, rewards on your spending or cashback.
Providing you don’t spend more than you can afford, exceed your credit limit or miss your repayments, credit cards can be handy in making your Christmas present splurge more affordable.
Just be sure to always make at least your minimum payment on time each month so you avoid additional charges from your lender and damage to your credit history. And, if possible, clear your balance in full each month so you don’t have to pay any interest (if you have a credit card with 0% interest, make sure you clear your balance before this deal is over).
What should I do before I apply?
Whenever you’re thinking of taking credit out, it’s a good idea to look at your credit history before you apply. Lenders will use one of three credit checking agencies - Experian, Callcredit and Equifax - to see how well you’ve managed your repayments in the past.
By signing up to one or more of these, you can see what lenders can see about you. Plus, if there are any errors on your credit history - maybe the lender has marked a missed payment, but it was a banking error – you can get this corrected.
Each of these credit checking agencies offers a free service. Head here to find out how you can check your credit history for free.
As long as you’re a responsible borrower, credit cards can have the added bonus of gradually improving your credit history. Of course, if you miss or are late with your monthly payments, this will leave a negative mark on your credit history and make borrowing in the future more difficult.
What’s Section 75?
A key advantage of shopping with your credit card is that it comes with an added layer of protection if the item you bought is faulty or the company you bought it from goes out of business.
Section 75 of the Consumer Credit Act 1974 offers protection on purchases between £100 and £30k. With Section 75, the credit card provider is equally responsible with the vendor to give you a refund if there is something wrong with your purchase.
At Christmas, whether you’re paying for toys your children have put on their lists for Father Christmas or planning the dream gift for your spouse, Section 75 gives you the assurance that if something goes wrong you’ll get your money back. And if you started your Christmas shopping early, you should have time to sort out a replacement ahead of the big day too.
There is an exception. Let’s say you used your credit card to put a deposit down on a piece of furniture - as long as this is more than £100, you should be entitled to a refund from the credit card provider, even if you paid for the rest with your debit card.
Another advantage of using your credit card at Christmas is that your online purchases are protected. If you shop online with your debit card, there’s no guarantee you’ll get a refund if something goes wrong.