Stop that plastic running out of control

Over-indulgent Christmas shopping can stretch credit cards to their limits, but there are ways to make the most of them

There are 37 days left until Christmas. No one likes to be Scrooge-like during the festive season. Good intentions of setting limits on the price of individual presents are frequently cast to one side as the perfect gift is spotted. Then there are the spontaneous buys of unessential luxuries. Before we know what has happened, our expenditure is running away like an out of control Santa's sleigh.

There are 37 days left until Christmas. No one likes to be Scrooge-like during the festive season. Good intentions of setting limits on the price of individual presents are frequently cast to one side as the perfect gift is spotted. Then there are the spontaneous buys of unessential luxuries. Before we know what has happened, our expenditure is running away like an out of control Santa's sleigh.

The result of an over-indulgent Christmas shop is either a liquidity crisis or credit cards stretched to their limits. Earlier this week, Target, the consumer software specialist, published research revealing that consumers in the North and Wales will take the longest to repay their Christmas borrowings. Only 25 per cent of cardholders in these areas will clear their indebtedness in less than six months.

This compares to 44 per cent for Londoners and 37 per cent for those in the East Midlands repaying their credit card companies by June. Residents of East Anglia are the most debt conscientious with 68 per cent clearing their card balances within six months. Those in the South-east follow closely at 63 per cent while the Scots are not far behind at 61 per cent.

But with preparation it is possible to make more of our expenditure and cut down on interest charges.

Budgeting As one wit remarked, "A budget tells us what we can't afford, but, it doesn't stop us from buying it." However, it is only by having a financial plan that one can begin to keep a check on expenditure. Last-minute shoppers are usually at a disadvantage as the later the buying of presents is left, the greater the tendency to overspend. The solution is to buy early and stick to a budget.

Save money by shopping online Target's research reveals that 30 per cent of females and 38 per cent of males plan to shop on-line this Christmas. Apart from saving the hassle of High Street shopping, the retailer's reduced overheads are generally passed on to the customer. The result is that your planned expenditure will normally buy a better present than at a conventional retail outlet.

Remember that although e-commerce means that you can make purchases at the click of a button, the goods have to be physically delivered to your door. For this reason, as well as avoiding the disappointment of your chosen gifts being out-of-stock, it is best to shop sooner rather than later. Aim to complete your on-line shopping by 1 December.

Gifts of lasting value More jewellery is purchased at Christmas than any other time of the year. Buy a brand new piece in the High Street and like a new car it will immediately lose a great deal of its value. However, the astute purchase of an antique or period jewel is better value. Not only is it unlikely to depreciate as much in the short term, but it also has the better potential of increasing in value in the long term. The same goes for silver, porcelain and other antiques.

Browse www.sothebys.com, view traditional auctions or visit antique dealers. Unless you are familiar with the world of antiques, always make your purchases from a reputable source and seek guidance before you make a purchase.

Playing the cards Even people who carefully plan the financial side of the festivities can encounter a Christmas cash-flow crisis. By playing your cards right you can borrow and encounter no interest charges. Traditional cards give up to 56 days of grace before you have to pay for purchases.

Choosing the time to use your card to maximise your free period of credit is essential.

Take a look at some of your past statements. Look at the date on which they were produced. Most of them will have been prepared on the same day each month. A few will be dated a few days earlier. You will find that with those dated earlier than your normal statement date would have fallen at a weekend. To ease their administrative burden, card companies generally stagger the preparation of statements that would normally be produced over a weekend from the middle of the preceding week.

Purchases made immediately after the date on which your statement is prepared will give you the maximum period of interest-free credit. By planning your expenditure and remembering to pay your bill, in full on time, it means that you can postpone the cost of Christmas for nearly two months interest free.

Keep a running total of your expenditure, not just to keep your spending in check, but to ensure that you do not exceed your limit. If this proves insufficient for your needs, give your card company a call and request an increase.

Shuffling the cards If you cannot see your way to clearing your debt in full in the New Year, then there is another card trick that will save you money. The card market is saturated and a ploy to lure people away from their rivals is to offer cardholders a low interest rate for transferred balances.

Those offering good transfer deals are the Egg Card from the on-line bank and Thomas Cook's MBNA International card. These offer an APR of 2.5 and 2.9 per cent on balances transferred from rivals. The concessionary rate lasts for six months in each case. It is likely that other attractive offers will be launched next month. Given the time it takes for a card to be issued, apply for the new card well before your period of interest-free credit ends with your current provider.

A resolution One good resolution for 1 January is one that no credit card company gives: set up a standing order to transfer a regular monthly sum to a savings account. This way you will be financially prepared for the festivities in 2001 and avoid contributing to the card companies' coffers.