Christmas is a lovely time of year where families get together, relax and enjoy each other’s company – for many, the only time of year they get to do so. With only five days to go until the big day, millions of workers will be anticipating the day off with their loved ones and the look on their faces when they open carefully selected gifts.
However, these gifts come at a cost, and with many friends and relations to buy for Christmas can often be one of the major expenses of the year. Thanks to a more technologically progressed society, popular gifts this year are expected to include items such as the iPhone 5, Samsung Galaxy smartphone, computer tablets, e-readers such as Amazon’s Kindle and a cacophony of expensive gadgets designed to entertain the recipient.
Even children’s toys are becoming more expensive and complicated, with this year’s most popular toy expected to be the Furby – an animatronic pet which speaks in its own language and moves its bat-like ears when its “owner” plays with it. This marvel of technology created by Hasbro will set buyers back a minimum of £50 depending on which retailer it is purchased from.
All in all, Christmas can end up lightening the average consumer’s wallet by hundreds of pounds, which thanks to the recent double dip recession is something that many in society are not best placed to afford.
However, there is a way in which consumers can lessen the blow to their bank accounts this festive season. Rather than using a debit card or traditional credit card at the tills when making Christmas purchases, savvy shoppers can apply for a cash back credit card which, while not giving a discount at the time, will ensure that consumers see some return on their spending spree.
The premise of the cash back credit card is relatively simple. Consumers use their credit card on a number of purchases throughout the year, thus building up the interest that is paid back to them. Then, on a fixed date in the calendar, the cash that they have earned by spending on their credit card is paid back to them.
Shopping around for the credit card to suit your needs is highly recommended, as there is a large selection out there which differs greatly according to the spending power of the account holder. The 123 credit card by Santander has proven immensely popular since its launch earlier this year, which is free if taken out with a Santander 123 current account.
The credit card offers 1 per cent interest on money spent in supermarkets, while department store purchases earn consumers 2 per cent cash back. 3 per cent can be redeemed on travel costs and petrol, yet this is capped at £9 a month.
However, many consumers do not spend in these places using a credit card, thus making the 123 account fairly redundant. For those who use their credit cards to make large purchases, rather than for day to day spending, the Cashback Credit Card by Barclaycard may be a more financially rewarding option.
This credit card can be extremely beneficial around Christmas time, as it offers a 6 per cent return rate on the five most expensive purchases per month for the first three months after the customer opens their account. This drops to 2 per cent afterwards, with any remaining items after the five priciest purchased earning a base interest rate of 0.5 per cent.
Unfortunately, this does come at a cost of £24 per annum – but by making large purchases on the credit card this fee of £2 per month will easily pay for itself. And while consumers must make a minimum of 15 transactions using the card in order to earn the 2 per cent cash back rate, this can be made up by making five relatively large transactions and ten small ones as consumers will gain interest on every purchase made. When looked at that way, it seems to be a win/win situation.
Around Christmas, a large amount of spending will take place in supermarkets and large stores due to the high volume of food and gift items required at this time of year. Consumers may as well make a return on the money they spend on Christmas 2012 – who knows, it may even ease the financial pressure for them come Christmas 2013!
Do you already have a cash back credit card, or are you considering taking one out in the near future? Are there any spending tips you would like to share in order to make your money go further by using them in stores or online during the festive season?
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