You really wanted this year to begin right. To get a better handle on your money – know what comes in, where it goes and have more left over. And yet here we are, the middle of January and you’re back to square 1. Your credit card statement has arrived! Agggggg!
A month or so ago the stores were decked out with Christmas decorations, the shelves filled with festive goodies and gifts. You were feeling good.
The Christmas spirit was well and truly in you, the gifts ideas that filled your head were inspirational. Everyone, it seemed, joined with you, the smell of real pine Christmas trees every where you went, confirmed it all.
There was the unmistakeable smell of food that only this time of year brings. You know, the irresistible smell of freshly baked butter shortbread and not forgetting the Christmas mince pies or the beautiful Christmas cakes. Bakeries were tempting you with pavlova, chocolate logs, brownies and delicious cup cakes. Supermarkets had emotive displays of turkeys and hams, begging to go home with you.
Ohhh, yes! Now was the time to be generous. Time to show everyone how much you cared. Time to give to those people you love.
Flash back to the present.
What on earth am I going to do about this credit card bill?
Let’s look at your options:
- You could ignore it.
- You could pay a little off each month.
- Pay the whole lot now.
Obviously #1 isn’t going to work, they’ll get me in the end, #2, the interest ensures you’re continually in debt and simply reinforces those bad habits and puts you back to where you were last year. #3… you know it’s the best thing to do but that’s definitely isn’t going to happen.
Hold on. There could be a ‘Santa’s Helper’ on the way from a quarter you wouldn’t expect.
Some banks are getting into the post-Christmas spirit with offers like this:
“Pay 0% interest for the first 12 months on balances transferred from a non-[name of the bank] credit card before 8 March 2020. Offer available between 13 January and 8 March 2020.”
Sounds pretty darn attractive doesn’t it. Almost too good to be true; a bank offering interest free terms. So, I went onto the website and read the fine print (as I know you probably won’t) and here’s what it said.
“After 12 months our standard purchase interest rates will apply to any remaining balance transferred. Excludes business credit cards. Interest rates are subject to change. [name of the bank] lending criteria, terms and fees apply.”
So, I dug a little deeper. What would those standard interest rates be if you didn’t pay off the card in 12 months? This varied from bank to bank; interest on purchases ranged from 9.95% to 20.95%, depending on card type and if you drew out cash, the rate could leap up to 22.95%
Not all of the banks had this 0% offer, one did offer 1.99% for 12 months on balance transfers and some had 6 months terms.
The moral of the story here: if you do decide take-up the ‘Santa’s Helper’ offer from any of the banks, make sure you pay the card off completely in that period. Then, either don’t use it again or continue to pay it off every month.
Easier said than done.
Particularly as the reason you will take up the ‘Santa’s Helper’ offer, is that you didn’t have the money for those wonderful gifts in the first place.
Credit cards can make our lives so much easier, if used wisely. But they also make our lives miserable as the pleasure of spending and the pain of paying is separated. Our brains love pleasure and the temptation is to spend baby, spend.
The best way not to wake up with the January credit card blues is to plan your purchasing, know who you need to buy for, how much you intend to spend and don’t get caught up in the emotion of Christmas shopping. Use cash rather than your credit card, but if you do use a card, keep the track of what you spend so there are no surprises later.
Remember this little gem?
You’ve heard the saying, “Insanity is doing the same thing over and over again expecting different results.” But it’s not insanity that keeps us stuck. It’s our habits.
Have a look at our new online course, Money & Me! You will learn how to change those habits and begin your journey to better money management. To learn more about the course simply click here.
If you have any questions around this or you would like to discover how you can change the way you think about your money, then drop us an email or click on this link to find a day and time that suits you to have a chat with us. Best of all – it’s free!