Play your cards right or it's mistletoe and whine

Sam Dunn on finding the best plastic for your Christmas spree

For millions of shoppers, Christmas and credit go together like mince pies and mulled wine. And the tradition won't be broken this year, as financial information firm Moneyfacts estimates that 60 per cent of us will put at least part of the bill for presents, food and drink on plastic.

For millions of shoppers, Christmas and credit go together like mince pies and mulled wine. And the tradition won't be broken this year, as financial information firm Moneyfacts estimates that 60 per cent of us will put at least part of the bill for presents, food and drink on plastic.

This bill will be a big one. Despite concerns over the level of personal indebtedness in Britain, and the increases in the cost of borrowing caused by four interest rate rises since last Christmas, Maestro, the debit card company, predicts we'll each spend some £337 on gifts - barely £10 less than last year.

To ensure as mild a post-Christmas debt hangover as possible, choose a card that suits your spending style.

For those who don't pay off all their debt each month - and that's more than half of us - a 0 per cent introductory deal on purchases is a must.

The Sainsbury's Bank card offers 0 per cent on new purchases for 12 months, while HSBC's Classic Plus card won't charge interest until 1 September 2005.

Consumer body Which? recommends the Halifax One Visa card, with an introductory 0 per cent for nine months before switching to a standard annual percentage rate (APR) of 9.9, depending on your credit status.

With barely 20 shopping days before Christmas, time is tight, but you should still be able to get your hands on both the One Visa and the HSBC card.

Visit a branch, instead of applying online or by phone, to halve the time taken - seven to 10 days at the Halifax, and as little as five with HSBC.

For those already spending on a 0 per cent card but in danger of paying interest at the standard APR - usually above 10 - early in the new year, search now for a 0 per cent balance transfer.

Switch to one of these deals and your monthly repayments will chip away at your debt rather than at any interest.

Transferring £1,000 of Christmas credit card debt at 14.9 APR to a 0 per cent deal will save you £70 in interest over six months, calculates Which?.

Watch out for industry practices that can cost you money. For example, the first £5,000 transfered to Barclaycard is interest free until 1 September 2005, but you have to pay a 2 per cent balance transfer fee (capped at £35). Any transfer amount above £5,000 will be charged an APR of 6.9.

Check where your monthly repayment goes, as you may be charged different interest rates for purchases and transfers. Usually, lenders like to whittle away cheaper debt first, leaving what you owe on expensive new purchases to build up, although Nationwide, HSBC and Liverpool Victoria pay down your more expensive debt first.

Which? says it's best to go for a card offering 0 per cent on both new goods and balance transfers, such as the Halifax and HSBC products. Alternatively, you should choose a card with a low APR for purchases.

If, however, you always repay your debts each month, you'll be better off with a card offering cashback over the Christmas and January sales period.

How much you get - typically 0.25 to 1 per cent at the moment - has dropped recently and depends on what you spend; often, the rate falls once you go over a certain sum.

Nationwide's Cash Reward card offers 1 per cent back on any amount you spend for the next six months before halving, but it carries a high 15.9 APR.

Forget to pay off your debt, or find yourself short of the funds needed to make repayments, and you could wipe out your cashback gains.

For £1,000 spending, Which? recommends the Morgan Stanley Cashback card, which gives you £10. Any purchase up to a £2,000 limit earns 1 per cent, and the rate is 0.5 per cent after this.

For heavy spending of £5,000 or more, the consumer body recommends the American Express Gold or Blue cards. You would earn £40 for your £5,000, though you'd pay a £15 fee if you spent less than £500 a year.

A 2 per cent deal is available with Amex's Platinum card, but only if you spend over £7,500.

If you struggle to keep up with all your debts, you could stick to a low standard APR for both purchases and balance transfers: Capital One's "No Hassle" Platinum card has a rate of 6.9.

Steer well clear of store cards unless you can clear your debt each month. The initial discounts are only worthwhile if you can avoid the astronomic APRs - 29.9 at Burton and Monsoon, and 29 at Habitat.

Apart from a credit card, you may be tempted by a cheap unsecured personal loan to get you through the festive season. But the rigid structures on these deals can hold you back, warns Nick White at uswitch.com, the price-comparison website. "Not all lenders let you overpay on your agreed monthly repayments - and many charge redemption fees if you repay your loan early."

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