Andrew Hagger: Don't be caught out by your cards this Christmas

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With just more than five weeks until 25 December, the festive shopping season is in full swing.

During the past few days, I've seen some shoppers barely able to walk as they struggle to carry half a dozen bags on each arm. It's so easy to get carried away at Christmas and then end up with a financial hangover come January, so it's not a bad idea to draw up a budget of how much you can afford to spend on presents, food and parties – then do your best to stick to it!

There is nothing wrong with using a credit card which offers 0 per cent interest on purchases, such as the Tesco credit card which is interest-free for a market-leading 13 months (other cards include Sainsbury's Finance 0 per cent for 12 months, or M&S Money 0 per cent for 10 months). This will help you spread the Christmas financial burden, but don't get too carried away because you don't want to still be paying for turkey, tinsel and presents next July.

If you want to take advantage of one of these 0 per cent deals, you will need to apply now so that have your plastic in hand and ready to shop by the start of next month. A 0 per cent purchases card means you will pay no interest on anything you buy with it for the duration of your introductory deal, but remember you still need to make the minimum payment (typically 2 per cent to 3 per cent of your balance) each month when your statement arrives.

Alternatively, if you've got some big purchases to make, it may be worth looking at a cashback credit card (Capital One and Egg both offer cards with 1 per cent cashback). However, the golden rule with a cashback or rewards card is to always pay your statement balance in full, otherwise the monthly interest charges will more than wipe out the value of any rewards you earn.

I would normally recommend you give store cards a wide berth because of their scary interest charges (often between 25 per cent and 30 per cent APR). However, if you have strong willpower, you can sign up for a card to get a 10 to 15 per cent discount off your purchases in store, but only if you are certain you will repay the full balance when your statement arrives (thus incurring no interest charges).

It's too late for this year, but if you regularly use a rewards-based credit card such as Tesco's Clubcard or Sainsbury's Nectar, you have the chance to accumulate sufficient points for next December to help offset the cost of your Christmas shop. Another way to build up cashback rewards is by getting into the habit of making purchases through a single website such as Quidco.

In a nutshell, if you can't afford it, don't pile it on plastic. You won't thank yourself when January and February's salary is virtually wiped out covering your Christmas excesses.

Skipton withdraws one-year 3.3 % bond

so much for me giving Skipton Building Society a pat on the back for its 3.3 per cent one-year bond last week. Sadly, the level of demand meant it was withdrawn after four days and replaced with a new bond at a lower rate of 3.15 per cent gross, although this is still the highest in its field.

The market for easy- access savings remains buoyant and last week, Norwich & Peterborough Building Society launched an e-saver account, paying 2.80 per cent gross and allowing unlimited penalty-free access. But as with most of the leading instant-access accounts, the rate includes a bonus, in this case 1.6 per cent, for only the first 12 months.

The appetite for longer-term fixed mortgages is growing, so it was no surprise to see Leeds Building Society launch a range of competitive five-year fixed rates, including for those with small deposits. There is an 85 per cent loan-to-value (LTV) deal fixed at 4.69 per cent with a £995 fee, or a fees-assisted option at 4.99 per cent with a £199 fee and free legal and valuation services.

For those seeking a 90 per cent LTV mortgage, HSBC cut the rate on its two-year fixed rate deal to 4.99 per cent with just a £99 fee.

Andrew Hagger is a money analyst at Moneynet.co.uk

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