As the holiday season hits, many people find themselves blowing the budget.
As the holiday season hits, many people find themselves blowing the budget. DAN HIMBRECHTS

A credit card can turn joy into pain in a month

WELCOME to Christmas week - potentially the most dangerous and most frustrating time of the year.

You can spend 11 months doing all the right things and making solid progress, and then find all your good work destroyed as the holiday season hits and you get caught up in the inevitable spiral of overspending and overindulging.

In a flash the end of January comes and you find yourself trying to deal with a maxed-out credit card, school fees and clothes that have suddenly shrunk.

First, be aware that shopping with a credit card has a very different feel to shopping with cash.

Have you noticed that pulling a $50 note out of your wallet feels very different to booking up $50 on a credit card?

This is why you inevitably get a shock when the credit card statement arrives and you discover that all those tiny amounts have combined to such a large sum.

Where possible, use cash, or else a debit card - this will help you control your spending.

Next, make sure you have a credit card that is appropriate for your own situation.

You can read a comparison of the leading cards at but just keep in mind that there are two basic types - those that offer an interest-free period, and those that don't.

Now the interest-free period might sound fine, but you are only eligible for it if you pay the entire balance before the due date.

Even if you pay most of it, they will still charge you interest on the whole lot if you are even one dollar short.

The solution is obvious - unless you pay the card off each month don't waste money on cards that offer an interest-free period.

If you are a heavy spender who can pay the balance in full each month, choose the card that gives you the best rewards. These may include frequent flyer points, free holiday insurance and even a concierge service.

If you are a moderate spender who pays the card in full every month simply choose the one with the lowest annual fee.

After all, if you are only spending $1000 a month you are not going to get much in reward points.

Noel Whittaker is the author of Making Money Made Simple and numerous other books on personal finance. His advice is general in nature and readers should seek their own professional advice before making any financial decisions. Email: