Jeremy Tauri: Avoid festive overspending this season

Try not to overspend this Christmas. Photo / 123RF

'Tis the season to spend money.

If your kids are anything like most of the children I know the demands for the Christmas wishlist started in October.

Even if you are careful about not spending excessive amounts on presents, the extra costs always seem to add up — whether that's from organising festive meals or having people to stay.

Here are some things to watch for to ensure that your Christmas spend-up doesn't turn into a new year nightmare.

Part-payment late fees:

Part-payment platforms have taken off this year. They allow you to spread the cost of a purchase over four to six weeks, without paying any interest. This is good for people who want to spread the impact over a few paydays but you'll need to make sure you keep up with the repayments. If you're late with a payment it's common for platforms to add up to $10 a week.

Credit card interest-free days

You can get up to 55 days interest-free on your credit card for new purchases. There's a few things to watch for, though — the "up to" — if you buy at the end of the billing cycle, the interest-free period could only be a couple of days. You also won't get any interest-free period at all if you haven't cleared the bill in the previous month.

Hire-purchase minimum payments

If you sign up to a hire-purchase agreement on a big purchase, check how long you're due to pay it off for. Many shops offer interest-free periods but the minimum payments you're set up with don't allow you to pay off the loan within that period — so you get stung with a high interest rate at the end.

Getting rid of your debt

If you've got a major debt problem you might look at a debt consolidation loan. This can work if it makes the payments more manageable, but watch out for loans that simply extend the term of your loan — this can mean you end up paying much more overall.

Similarly, putting a small amount on your home loan is appealing because of the low interest rate but can be much more expensive if you take the rest of your home loan term to pay it off.