Money Magic: Top tips to keep you solvent

I hate to mention the word discipline. But that is what it takes to spread the cost of Christmas over several months without paying any interest on the debt.

The banks here are struggling to make as much money as the £40bn profit they made last year so they are trying to take a bit more from us.

One way is to offer great deals on credit cards hoping we won’t be disciplined and end up boosting – rather than nicking – their profits. But that underestimates Community Care readers! Discipline? Born with it.

So here’s the plan:

Step 1: Search the best buy websites for credit cards that offer the longest period of 0% interest on spending. As I write – and it changes every day – you can get 12 months from Capital One and Halifax and nearly a year from MBNA. If looking to transfer a balance check the % charge.

Step 2: Apply. You’ll need a good credit rating. As soon as the card arrives ring up and arrange to pay the minimum every month by direct debit.

Step 3: Work out how much you can afford to repay each month until the free credit comes to an end. Multiply that by the number of months at 0% and – here’s the discipline bit – that’s your spending limit.

Step 4: Use the card for any spending you would normally put on your card and delay paying off. Christmas presents, that new outfit, a GPS unit. But only within your overall spending limit.

Step 5: Every month put the monthly payment from Step 3 into a high interest savings account – check the online best-buy sites and aim for more than 6%.

Step 6: When you reach the limit from Step 3 stop spending and cut up the card.

Step 7: Note in your diary when the 0% deal comes to an end and make a note a month before it. On that date call the card company and find out when you have to pay off the account before you are charged interest.

Step 8: Allow for the slowness of the banking system and take enough money out of your savings account in good time and pay off the credit card in full. Cancel the card.

Step 9: Leave the surplus in your savings account. Making your money work is the easiest way of earning extra without working yourself. Simple, eh?

Paul Lewis is a freelance writer who presents Money Box on BBC Radio 4