Christmas hangover at Easter

The clocks have gone forward and the Easter Bank Holiday weekend is eventually coming. Easter eggs seem to have been in the shops for weeks already but finally it will soon be time to actually hand them over.

If you’ve worked through since Christmas without a holiday then this will be the first break since the festive season.

Unfortunately millions are still suffering a Christmas hangover and are paying for financial excesses at the 2006 festive season. Around £11.4 billion was put on plastic at Christmas so it’s no surprise that millions haven’t quite got round to sorting out our finances.

MoneyExpert.com is here to help you boost your wealth and guide you to becoming debt-free.

Debt is for life, not just at Christmas

More than 4.2 million of us were still paying for Christmas 2005 in December 2006. Nearly one in eight of us were still paying for Christmas 2005 at Christmas 2006.

In fact it takes an average 2.6 months to pay off Christmas plastic debts. Of course we’re not all putting debt on our cards. Around half of all credit card holders did not put any debts on their cards at the festive season and 17 per cent took a month to clear it all.

If you’re one of those people then you are sitting pretty and congratulations. But if you’re not then it may be time to take action if you can afford to.

It pays to be card wise

Someone putting £1,000 on their card at Christmas and not clearing it for a year will rack up more than £169 in interest charges at the average rate of 16.9 per cent. And they’ll still owe £1,000 as well with no plans to clear the debt.

It is easy to get into a spiral of debt and to keep on building a balance on your card. In fact it is very tempting just to make the minimum repayment every month. Set up a direct debit and you can just ignore the card as long as the minimum repayments are being made.

You can even keep on spending as long as you don’t break your credit limit without any worries.

Ever decreasing circles

The less you pay on your card, the more the interest builds up. If for instance you owe £3,000 and only pay the two per cent minimum repayment each month it will take you around 40 years to clear the debt.
That’s a long time to pay for Christmas or indeed for any special event. And it’s even worse if you take into account how much interest you’ll pay on the £3,000. Over 40 years you’ll rack up more than £6,000 in interest if you only make the minimum payment each month.

Play your cards right

If you are carrying major debts on your cards then the first thing to do is to stop spending more than you can afford.
You should then try to find a card to transfer your debts to if you are paying a high rate. Look out for Lifetime Balance cards. These guarantee a low rate for as long as you need it and give you a chance to try and cut your debts.
You should also look for balance transfer cards. Some companies will offer you up to 13 months at zero per cent on a balance transfer. If you switch £3,000 and pay off £230 each month on one of those cards you’ll clear the debt in 13 months.
That will ensure you are debt-free and allow you to boost your wealth without worrying about how you meet your credit card payments each month.

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