Avoiding the Christmas credit card hangover

According to Commonwealth Bank, Australians are predicted to spend $18 billion this Christmas season, a further $2.2 billion more than last year. Getting swept up in the spirit of Christmas can lead to spending over and above your income, leaving your credit card to make up the difference.

Credit reporting agency Veda Advantage says Australians usually apply for more credit between October and December and those that receive the credit are 8 times more likely to have a black mark on their credit report in the New Year.

Over spending on credit cards can have a flow on effect on your other financial commitments, leaving you short to pay bills. In turn, a bill that is left unpaid for 60 days or more registers a black mark on your credit report that lasts 5 to 7 years.  So, if you have plans that involve seeking financing between now and 2020 – be it a mortgage, car loan or new mobile phone plan – a Christmas credit card hangover is something to avoid at all costs.

If this sounds familiar, it doesn’t have to be you. Here are some tips to help manage Christmas spending:

1.    It may sound simple, but leaving your credit cards at home and shopping with cash this Christmas, will help to not add more to your current credit card debt
2.    Don’t ignore your credit card problems. Pushing aside the monthly credit card statements won’t help your financial situation  
3.    If you are struggling to make repayments, speak to your creditors. Many understand the stress related to this time of year and may arrange a temporary payment plan to help get you back on track
4.    Be prepared. Plan a Christmas budget and start saving now for 2014. Putting aside a small amount each week can make it easier to pay for the festive period when it comes around again

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