The jingle of distant tills

'Be sensible or you may find your debt is not just for Christmas but for a good chunk of life'

Christmas is coming, which means the debt on our credit cards, overdrafts and loans will surely be getting fat from all the presents we are squirrelling away.

Christmas is coming, which means the debt on our credit cards, overdrafts and loans will surely be getting fat from all the presents we are squirrelling away.

On credit and debit cards alone, it is expected we will spend about £17.7bn this month, or £200 a person. This mind-boggling amount is part of a 15 per cent year-on-year rise in spending on cards.

Our growing debt is very much on the Government's agenda. An investigation was launched recently by the Office Of Fair Trading into whether all offers of loans are appropriately targeted and have clear terms, and this week the Financial Services Authority weighed in with concerns about mortgage lending.

Christmas will only add to this borrowing, which means debt repayments on credit cards are expected to be greater than spending in the first two months of next year.

What's to be done? It would sound somewhat Scrooge-like to suggest presents should be kept to a "It's the thought that counts" packet of hankies or possibly a pair of socks.

But it is sensible to think about ways to minimise the bill, otherwise you may find your debt is not just for Christmas but for a good chunk of life. However, it is not easy to make the right choices, especially because we often don't know what questions to ask. These days companies rarely break the rules by charging you heavy fees that they specifically promised not to charge. That is illegal and they can be sued for it.

But quite frequently they levy fees that are mentioned in the small print but not immediately obvious. So it comes down to knowing what to look for. As our article on page 3 shows, initial credit card offers can sound tempting, but the details can be distinctly off-putting.

Store cards are particularly perilous, with many charging monthly interest rates of up to 30 per cent - well above even the most expensive mainstream credit cards.

Cards are not the only way to pay for Christmas and the January sales. There are personal loans, loans secured on assets like your house, and overdrafts. It may seem excessive to think about taking out a loan of a few thousand pounds to pay for shopping, but it can consolidate various outstanding debts and cost less in the long run than credit cards.

However, here too are pitfalls. A survey published this week by the consumer magazine Which? shows loans that look cheap can in fact be quite pricey.

The internet has done a lot to drive down prices but traditional players are becoming increasingly competitive. For example, American Express and Lloyds TSB are two of the few not to charge redemption penalties for early repayment.

Shopping around is undeniably the best approach - with one word of warning. When you ring a loans provider for a quote you are credit scored. Do this six or seven times in a day and the credit scoring agencies begin to think you are dodgy. If you go back to one of the companies to sign up you may find the offer has been withdrawn or terms are less favourable.

John Willcock is away