Debts & Loans

Money or no money, you can't avoid shelling out cash during the festive season.

Bills, food and mortgage or rent payments siphon off up to 90 per cent of the salaries of one in ten people, according to Abbey.

Disposable income, meanwhile, has taken a bashing, plummeting nearly 30 per cent in just two years, leaving us even less to spend on Christmas presents and celebrations.

A return on investment

You can minimise your holiday outgoings but if you need to borrow, you'll have to do it even more wisely this year. Beyond finding a low-interest credit card, consider applying for one that works for you and pays you something in return.

Martyn Saville, senior researcher at Which?, advises: 'You need to pay off this year's purchases before you launch into next year's holiday shopping so be careful about your spending. If you can afford to repay a cash-back card every month, then it's a good idea.

'The best offer at the moment comes from the American Express Platinum cashback card. If you cannot clear the debt straight away and you need to borrow, then Barclaycard Simplicity is offering a low rate of 6.8 per cent. It's not cost-effective to resort to payday loans or doorstep loans that charge high APRs.'

Credit unions

A number of cards offer introductory zero per cent interest on balance transfers for ten to 16 months. They include Halifax All In One, Barclaycard Platinum, Virgin and MBNA Platinum Plus.

The Halifax All In One card's ten-month interest-free period tops the list for purchases. 'Thinking about next year, it's wise to use a credit union if finances are tight,' Saville adds.

'If you save with a credit union, you can eventually borrow from them, too, and they are really good for people with low credit scores and poor credit histories.

'Finally, if you are struggling with debt after Christmas, don't bury your head in the sand. Get debt advice from an organisation such as the Citizens Advice Bureau - don't pay for advice that you can get for free.'

Use all the resources at your disposal this Christmas. It's not all about the credit cards - use your store loyalty cards, too. Even if you don't have enough points to buy a gift, it could reduce the full cost and ease the pressure on your wallet.

The schemes work by building up points per pound spent in the store throughout the year, and some offer bonus points on certain items. Points can be redeemed with the card, while supermarkets tend to tally the points and send out money-off vouchers to spend in-store.

Savings can usually be made on a selection of treats from music downloads, books, DVDs, theatre tickets, spa days, beauty products, hi-tech gadgets and cases of wine. John Sheekey, Nectar's marketing director, says: 'Taking full advantage of loyalty schemes that give you something back for the money you've spent is a great way to make your pennies stretch even further.'