The myth of the Christmas loan
Released on = October 13, 2005, 8:50 am
Press Release Author = Rachel Lane
Industry = Financial
Press Release Summary = There is no such thing as a Christmas loan, but there is
such a thing as clever marketing
Press Release Body = If you think Harry Potter was going to be the most imaginative
marketing plot this Christmas, think again. Each Christmas as consumers look at
their finances and investigate the different sources of funding to cover their
Christmas shopping, loan companies and credit card providers polish up their
marketing tactics and customer service skills.
No doubt some of you will see an advertisement for a Christmas loan over the next
few months. Unfortunately for you it’s not provided by a jollyvaceous (curvy and
happy) bearded man in a red, furry suit. It’s more likely to be a cunning marketing
initiative by a loans company, designed to exploit consumer cash concerns over
Christmas.
If you need credit over Christmas – you will probably fare better with a credit
card, but if you have to take out a loan, you’d be better to search for a standard
personal loan, on a secured or unsecured basis. There are plenty of sites which
offer price comparison services for credit cards and loans. The most popular ones
include moneynet, moneysupermarket and lowermybills, but if you really want the best
deal – why not visit them all and cross-reference the fairest deal.
When searching for a credit card – there are several things you need to consider.
Firstly, you may wish to transfer existing debt from your old credit card, by taking
advantage of an introductory interest free period on a new credit card. Despite the
apparent 0% interest rate on all balance transfers – do ensure that you are
genuinely being charged no interest and that once the interest free period is over –
you’re not going to be hit by an unusually high APR (Annual Percentage Rate) – the
interest rate. Also look out for additional charges and hidden fees on the credit
card and make sure you have set up your account for minimum repayments.
Credit cards offer you greater flexibility in your repayments than personal loans,
though credit cards may be sold with higher rates of interest. You can pay off the
balance on your credit card early without a charge and as long as you track what
you’re buying on plastic and set up minimum repayments, you’re likely to manage the
debt effectively. However, do bear in mind that late repayments and fines may
affect your credit history, so don’t assume that just because you can’t see the debt
that it isn’t there. Personal loans can be a suitable credit solution – if you need to make the
repayments over a longer period. However, you need to be a realistic about the
total repayments – firstly that you can afford them and secondly – that you’re
prepared to make all of them. For example, if you decide half way through the term
of the loan that you could actually afford to pay it off in full, you should be
aware that there will probably be an early repayment charge which may bring the
amount to the same as the total number of repayments.
Credit is for life, not just for Christmas; what you pile on to plastic in December
may lead to a significant financial hangover in January. The best thing you can do
is plan your shopping in advance, shop around (including online) and stick to your
list of what you intend to buy – no impulse purchases!
* * * * * * * * * * * * * * * * * * * * *
Resources
http://www.moneynet.co.uk/loans/index.shtml Price comparison research for loans
http://www.moneynet.co.uk/personal-loan-guide/index.shtml Personal loan consumer guide
About Rachel:
Rachel writes for the personal finance blog Cashzilla – a mighty
personalfinanosaurus living in the hills around Edinburgh.
http://www.cashzilla.co.uk
Web Site = http://www.cashzilla.co.uk
Contact Details =
Rachel Lane
E-mail: rachel@positiveinterest.com
Phone: 0131 561 2251
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