Paying off your post Christmas credit bill

“Aaarrrgghhhh.” Let me guess. You’ve just opened your credit card statement which includes Christmas. “How much! Good grief. It can’t come to that!” And ‘that’ probably includes the remnants of last year’s second holiday and, gulp, a little bit from Christmas 2006 as well.

So now your New Year resolutions are safely forgotten the time has come to take control of your money. Or rather other people’s money. Because if you have debt it is not your money you have spent. It is the bank’s. And the dear old bank has problems of its own (credit crunch, sub-prime etc) and guess who’s lined up to pay? Yes, you. So the bank will make you pay, pay and, if it can, pay again for the privilege of using its money to pay for your Christmas.

But with a little bit of discipline you can be Uma Thurman and get your revenge. Your card company is probably charging you 17% a year to borrow the money. That is a staggering amount – three times what the bank pays when it borrows money. But other banks are after your business. And they will charge you much less. If your debt is too big to pay off in a year (work it out – divide the debt by 12 – could you afford to pay that each and every month for the next year? Thought not.) then you need a life of balance credit card deal. This is a card that lets you transfer a debt and then charges you a fixed rate of interest until that debt is paid off.

At the moment the best deals are Citi Platinum Life of Balance MasterCard at 5.8%, Leeds Building Society Mastercard at 5.9% but with a 2% transfer fee and the same rate from Barclaycard Platinum Life of Balance Visa but with a transfer fee of 2.5%. If your credit rating is not great Citi may try to charge you more. Apply for one of the others. When it arrives:

Step 1: Get out your scissors and cut up the card you are transferring the debt from.

Step 2: Cut up the new card you are transferring the debt to.

Step 3: Transfer the balance (you will have a few days grace to do that).

Step 4: Work out what you can afford and pay that amount every month. Do not just pay the minimum. That way eternity lies.

And next year you won’t need Kill Bill Vol. 2

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

This article appeared in the 31 January issue under the headline “Kill Bill vol one”

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