credit card

What’s your Christmas credit card action plan?

Credit cards are likely to be out in force this Christmas, so here's our tips on using them to your advantage plus other payment options.

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Credit cards can be really helpful this time of year if you use them wisely, but get it wrong and you could be paying up to $1000 in interest very soon.

New research by finance comparison website predicts the average December credit card spend alone will top $3,700 and the majority of Aussies haven’t set aside any money to pay for Christmas.

The online survey of 1,001 Australians found that 56 per cent of people have not saved to pay for Christmas and don’t have a plan for paying off any debt incurred after the big day.

Over 55s are the most unprepared for the cost of Christmas, with 63 per cent admitting they have not saved for the festive season.

The tips for using credit cards this Christmas are simple:

  • Have a Christmas shopping budget set and try to stick to it
  • Go for zero balance, or zero per cent interest rate credit card
  • Aim to maximise your repayments in the interest free period
  • Don’t overspend on a credit card if you are unlikely to have the cash to pay off the debt within six months.

“It’s concerning that so many Australians are financially unprepared for Christmas,” says Mozo Director Kirsty Lamont.

“Turning to loans and credit cards will be the only option for many households, but choosing the wrong type of credit can add up to 25 per cent to the cost of Christmas.”

Mozo looked at the cost of spreading out Christmas costs over six months using an overdraft and a home loan redraw facility, as well as payday loans, personal loans and credit cards

Payday and short-term loans top the list of the worst ways to pay for Christmas, with interest rates of above 45 per cent and hefty establishment fees adding a whopping $938 in cost to the average silly season spend.

Mozo’s analysis shows that redrawing on your home loan or using a zero per cent purchase rate credit card are the cheapest borrowing options for covering the cost of Christmas.

Mozo says for Christmas shoppers who can’t redraw a home loan or open a zero per cent purchase rate credit card, an overdraft is the next best option costing $187 to repay the average Christmas spend over six months.


The naughty and nice ways to pay for Christmas by Mozo


Type Interest Rate (p.a.) Establishment fee Total Repayments Total Interest and Fees
Typical payday loan 47.62% $400 $4,690 $938
Average unsecured personal loan 12.14% $167 $4,071 $319
Average credit card 17.35% $123 $4,067 $315
Average overdraft 13.10% $0 $3,939 $187
0% purchase rate credit card 0% $96 $3,848 $96
Redraw on home loan 4.37% $25 $3,825 $73
Christmas spend for average cardholder: $3,752

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