4 spending habits to practice before next Christmas

By UK CreditCards.com

You should be used to being inundated with credit card bills every January, but they still typically carry a shock. Why do we repeat the same behaviour year after year when holiday gift-giving can be done less painfully?

Maybe it's time to break the cycle. Here are some creative ideas to implement now that can leave you debt free next January -- imagine that.

1.   Shop early and within your budget.

When you hit the shops, make sure you know exactly what your budget is. Avoid last-minute shopping, whether it's for a birthday or a dinner party. The habit of shopping in advance will serve you well when the holidays arrive again, as the stress of finding a gift at the last second can cause you to choose something expensive, just to have something to put under the tree.  shopping-habits

Start making your Christmas gift list in autumn. Set a spending limit for each person on your list, and write down some possible gift ideas. By planning your spending earlier, you'll become fully aware of what you can afford to spend without breaking the bank. You'll also have time to comparison shop for the best deals.

2.   Get a prepaid card.

Prepaid cards allow you to load a certain amount of your own money onto the card, which can prevent you from overspending. Until you add more money, you won't be able to spend beyond that limit. If you are a chronic spender, prepaid cards can help you get rid of your "buy-now-pay-later" mentality.  You can preload your holiday spending money onto the card and once it's gone, your shopping should be done.

Start looking for the perfect prepaid card long before the next holiday season starts. Just as there are many different types of credit cards, there are also many different types of prepaid cards, and some of them carry a lot of excessive fees. If you are considering applying for a card, you will need to compare prepaid cards to find the one offering the best deal.

3.   Consider an interest-free credit card.

A card with an interest-free introductory period can allow you to charge your gifts and pay them off over a few months. Start doing your research during the late summer months. Some cards available in the UK have interest-free periods between three and six months. So, if you time things well, that means the gifts you buy in early autumn could be paid off by December.

Be careful, however. After that interest-free period ends, the annual percentage rate (APR) will likely balloon. An introductory 0 percent APR can be enticing, but if you don't pay off your balance during the interest-free period, that APR could shoot up to 15 percent or more. It is essential that cardholders considering interest-free credit cards have the self-discipline to stick to their budgets and pay their balances.

4.   Take only the essentials to the shops.

Get in the habit of taking only what you need with you to the shops. For example, if you are doing your shopping with a prepaid card, leave your credit cards and debit cards at home. This is a great way to ensure that you stick to your budget, as you can't spend any more than you have loaded on the prepaid card. By the time Christmas rolls around again, you'll be an expert at carrying -- and buying -- only the essentials.


See related: 5 new year's resolutions for cardholders, One in three could face Christmas debt hangover in 2012

Published: 5 January 2012