Have yourself a Merry debt-free Christmas.

Christmas is cause for celebration – but you shouldn’t take it as a cue that it’s time to lose all control of your credit card.

While we’re quickly approaching what is known as ‘the most wonderful time of the year’, for many, the festive season can also be the most financially challenging.

With presents, Kris Kringle gifts, work functions, food, decorations, extravagant trees plus all the essential bits and pieces such as wrapping paper and cards; the cost of Christmas can quickly take a financial toll.

And, if you’re not financially prepared to manage the Christmas rush, you could be setting yourself up for a negative start to the new year with the dreaded Christmas credit card debt hangover.

Now is the perfect time to prepare a Christmas finance plan to ensure that you can enjoy the holidays – without paying for it later.

Consumers can’t resist the urge to splurge   

When it comes to Christmas, consumers are spending more than ever before.

In fact, Aussies went from charging $3 billion on credit cards in December 1996 to a staggering $28 billion 20 years later – meaning we have hiked up the country’s collective Christmas budget by a cool $25 billion.

According to government research which surveyed the typical Australian Christmas spending habits, the average person is now tipped to splash $955 over the holiday season. In Victoria, it’s estimated that just paying for presents costs us an average of $562 each December.

While 75 per cent of survey respondents reportedly saved up for their spending spree, a high 36 per cent of consumers admitted to charging the costs to their credit card – and dealing with their Christmas debt at a later date.

On average those among us that choose to use a credit card for Christmas purchases will rack up a $1,666 Christmas debt on average, with most people taking up to six months to pay it off.

Not only are credit card users likely to be more inclined to spend mindlessly by using their cards, but collectively, Australians are estimated to repay $230 million in interest payments incurred from Christmas spending alone.

Avoid the financial pressures of paying off your December purchases well into 2019 by devising a Christmas finance plan.

Here’s our top tips on how to avoid Christmas credit card debt:

  • Make a list and check it twice

Santa is onto something! Writing down what you need to purchase over Christmas is the best way to visualise your financial plan. Consider your finances and set yourself an overall budget based on what you can realistically afford to purchase. Then allocate funds to presents and all the extras such as food and decorations based on your priorities.

Keep in mind that this spending strategy will only work if you obey the list you create and resist impulse buying.

  • Use your savings, not your credit card

It makes logical sense that the best financial choice for Christmas expenses is to save up enough cash to earn them. However, having the discipline to designate your finances ahead of time is easier said than done.

But consider that allocating a small sum such as $20 per week into a Christmas savings account over the course of a year will accumulate to more than $1000 in guilt-free spending money when you need it.

  • Set up a payment plan to avoid interest

If this year looks like it will be financially challenging, and you do end up using your credit card to get by this Christmas, there are still wise steps you can take.

Avoid interest on any purchases by trying to pay off your credit card within 55 days. If this isn’t possible, set up a payment plan or discuss with a financial expert whether a credit card balance transfer will suit your needs and help to ease the sting of interest charges.

The best Christmas present you can give to your family is a debt-free start to the new year, so choose to spend wisely this festive season.

Have you got questions about anything in this article? If so, please call us today on 1300 693 973.

Disclaimer: This content is generic in nature and not to be used as independent financial advice; readers should seek independent legal advice in the instance they feel they require it.