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Smart Money

Get Wise With Your Finances This Christmas

Last updated

Pauline Hatch      

Christmas is so close, you can almost hear Santa’s sleigh bells jingling. And while it’s hardly festive to Grinch about money, Christmas doesn’t come cheap. Here’s how to be wise with your money so you don’t spiral out of control this silly season.

Between gifts, social events, work functions and hosting Christmas lunches, Christmas costs add up pretty quickly. The way to keep your budget in check is to be prepared. You can be smart with your spending this Christmas, paying particular attention to budgeting, spend tracking and using your credit cards correctly so that you don’t end up with a debt hangover come January. Sounds fun, right? Let’s get started with a little game of Santa Says.

Santa Says: Budget, Budget, Budget

Budgets tend to go out the window as December rolls in and the silly season takes hold. Many of us see this period as a time to let loose, and are typically freer in what we do, how we act, and what we spend our money on. Perhaps even more so after two straight years of Covid-19 having over our heads. A tight rein on your spending starts with a good budget.

When you create a budget, take note of all your regular incomings and outgoings, as well as any incidentals you might need to cover. This should help you work out how much money you have left over to cover the cost of Christmas. If needed, it will also allow you to see where you can cut back to free up some additional cash.

Now it’s time to make a list, just like Santa. Note down all your Christmas spending and how much you expect to spend on each item. This could include gifts for family and friends, food and drink, travel, evenings out, and fun day trips with the kids. With everything down on paper – or your device – you can now compare that total with your available Christmas budget.

Need to cut back a bit? Here are some ideas you could try:

  • Research online to find out where you can get the best price on everything you need to buy. Be sure to take both shipping times and postage costs into consideration.
  • Consider buying pre-loved or second-hand items. When it comes to kids toys, especially the big stuff like bikes, cubbies, trampolines and swing sets, buying second-hand can be a great way to get your hands on gently used items at a fraction of the cost of buying new.
  • Try out the four gift rule. With this, you only buy four gifts for those who are special in your life, focusing on something they want, something they need, something to wear and something to read. Not only will this simplify your Christmas shopping list and keep costs down, it should also encourage more thoughtful gift buying while reducing the amount of junk in your house.
  • Opt for Secret Santa within your extended family and friend groups to save money and again, focus on buying something worthwhile.
  • Help out the little guy. Small businesses have really suffered this year. Instead of shopping big, consider shopping local. It may not always be the cheapest way to shop, but it should offer access to higher quality items, which could mean you buy less.
  • Keep it simple. If there’s one thing being in lockdown has taught us, it’s who we have around us, not the things we have that are important. Concentrate on spending quality time with those you love, rather than spending a heap of money on them. While it sounds pretty twee, memories tend to last longer than the gifts we give.


Santa Says: Know How Much You’re Spending

You have your budget and you have your Christmas list, so you know what you have to buy – and how much you can spend. Now all you need to do is stick to it.

Sticking to a budget is much harder than creating one, unfortunately. Especially when you’re out and about in the shops, surrounded by Christmas music, getting caught up in the festive mood and seeing all those little things you simply must buy.

Try to be strict when you’re doing your Christmas shopping, whether in person or online. Keep your list with you, and try to keep to it as much as possible. Depending on the type of shopper you are, it could help to limit the number of shopping trips you do, to get it all done in one or two visits.

Here are some other tips that could help as you work your way through your list.

  • Keep the kids at home when you shop to reduce the chances of you buying things on a whim, as they slowly wear you down with all their I wants.
  • Make use of tech to track and limit your spending. You can use online banking or your bank’s app to tally up your spending. Your bank or card provider may also allow you to set spending limits, which will cut off your plastic when you spend over a certain amount.

And if you’re planning to use a credit card to cover your Christmas spending? Used correctly, a credit card can be a handy tool come Christmas, allowing you to manage your money more efficiently. But remember:

  • Don’t spend for the sake of spending. It can be tempting to spend up to the card’s credit limit – but that doesn’t mean you should. Stick to your budget, and remember, whatever you put on your credit card, you will have to pay off in January – or risk paying through the nose in interest.
  • Don’t spend to earn rewards. With the right credit card, rewards can offer a nice little bonus on your spending. But, you should never spend simply to earn rewards, especially if you can’t afford to pay it all back when your next statement is due.
  • Don’t go over your credit limit. Avoid fees – and a balance you potentially can’t pay down – by keeping track of your spending to stay below your credit limit at all times.
  • Don’t spread yourself too thin. If you have a number of credit cards and store cards – and even BNPL accounts – it can be all too easy to lose track of how much you are spending on each one. Try to stick to one form of payment, or be prepared to get super organised with both tracking and management.


Santa Says: Use Your Cards Wisely

Moving on from tracking and managing spending on your cards, let’s talk a bit more about how you can use credit cards to your benefit.

First off, you must have the right card. With dozens of credit cards out there, it goes without saying each card is designed to suit a different spending style. To get the most from your card, you need to find the right credit card to suit your needs.

Rewards Card

Rewards cards typically suit bigger spenders who always pay their closing balance in full at the end of each month. With a variety of rewards on offer, cardholders can choose both the program that suits their needs, and the rewards that offer the most value on their spending.

Is a rewards card right for you this Christmas?

  • You have a big spend planned.
  • You are going to pay off your entire spend before it starts accruing interest.

TIP: Choose a rewards card that rewards your spending and provides rewards you will actually use. Take into consideration the card’s annual fee, and think about whether the card will offer value in the long term past Christmas.

Frequent Flyer Card

Frequent travellers can use a frequent flyer credit card to earn points on their travel spending, which can then be redeemed for travel rewards such as flights and accommodation.

Is a frequent flyer card right for you this Christmas?

  • You are planning to travel over Christmas and into next year.
  • You can afford to pay off your spending in full when your next statement is due.

TIP: Balance the value of the rewards you will earn against the card’s annual fee. Look at the card’s longer term value and your ability to earn points past this Christmas trip.

Premium Card

Premium cards such as platinum and black cards provide all kinds of perks on travel and retail and beyond. Choosing a premium card could offer more comfortable travel arrangements during your Christmas trip, or provide perks as you do your Christmas shopping.

Is a premium card right for you this Christmas?

  • You are planning on taking a trip over Christmas.
  • You want extras as you shop.

TIP: Many perks on premium cards are skewed towards travel. Think about the extras on offer, and whether perks such as complimentary travel insurance and airport lounge access will continue to provide value through 2021.

Low Rate Card

As the name suggests, low rate cards focus on low interest rates. Often basic in nature, these cards tend to keep extras to a minimum – but can allow cardholders who carry a balance to keep interest costs down.

Is a low rate card right for you this Christmas?

  • You carry a balance occasionally.
  • You want a simple card and are not overly interested in extras.

TIP: While low rate cards can help keep interest costs down, it’s best to pay off your balance each month when you can. Doing this not only keeps interest costs to a minimum, it can also make it easier to keep on top of your balance.

Low Fee Card

Low fee cards have low annual fees, allowing cardholders to keep ongoing costs down, while still enjoying access to credit. No annual fee cards provide even bigger savings. These cards tend to be simple in nature.

Is a low fee card right for you this Christmas?

  • You want to keep ongoing costs down and don’t see the point in paying high annual fees.
  • You only want basic features.

TIP: While some low fee and no annual fee cards combine low fees with low rates, others don’t. If you want to save on fees and interest, choose a card that has both a low (or no) annual fee and a low ongoing purchase rate.

Introductory Offers

Think of introductory offers like an early Christmas present. With the right offer, you could enjoy a little boost on your Christmas spend, as you get more value from the card. Here are some of the different types of introductory offers to look out for – and how to use them.

Bonus Points Offers

Offered on rewards cards and frequent flyer cards, bonus points offers provide new cardholders with a chunk of bonus points to boost their points balance. Bonus points are only credited to the cardholder’s account after making a minimum spend on the card.

Is a bonus points offer right for you this Christmas?

  • You want to use a chunk of points to book a trip.
  • You want to bank points for later.

TIP: Make sure you can meet the minimum spend requirements – and repay that spend before it starts attracting interest. Look for an offer that gives you a great points boost, while bearing in mind the cost of the card and its ongoing suitability.

Reduced Annual Fee Offers

With this type of offer, cardholders pay a reduced annual fee – or no annual fee at all – during the first year, reverting to the standard annual fee in following years. This offer can create value, allowing the cardholder to try out the card and make use of its features and rewards at a reduced cost.

Is a reduced annual fee offer right for you this Christmas?

  • You want to try a card on for size while paying less in fees.
  • You want to get more value from the card’s features and rewards.

TIP: When combined with other offers, a reduced annual fee offer can provide excellent value, whether you plan on keeping the card long term or not. If you want to keep the card, make sure the card’s standard annual fee is affordable – and that the card’s features and rewards still offer value when you’re paying full price.

0% Purchase Offers

With a 0% purchase offer, new cardholders pay 0% p.a. in interest on purchases made throughout the introductory period. This can provide an easy way to spread the cost of Christmas spending, while paying nothing in interest.

Is a 0% purchase offer right for you this Christmas?

  • You want to pay off your Christmas spending over a few months.
  • You want to save on interest.

TIP: For some great tips on how to use a 0% purchase offer to cover your costs this Christmas, check out our post here.

0% Balance Transfer Offers

Cardholders who have a balance on their existing credit cards can take advantage of a 0% balance transfer offer to pay down what they owe. After transferring their balance to the new card, they can pay down their debt faster while paying nothing in interest over the introductory period.

Is a 0% balance transfer offer right for you this Christmas?

  • You have a balance on credit cards or store cards that you want to pay down.
  • You want to save on interest.

TIP: While you can use a 0% balance transfer to start paying down your credit card debt now, it could also be an option once Christmas is over. With the right offer, you could transfer your balance post-Christmas to save on interest as you pay it all down over the coming months.


Opting For An Alternative Way To Pay

Earlier this week, the Commonwealth Bank launched its CommBank Neo card, creating a new way to pay for cardholders. Much like the NAB StraightUp card, which launched in September, the CommBank Neo aims to bridge the gap between buy now pay later (BNPL) platforms and traditional credit cards.

So, could either of these ‘BNPL’ credit cards offer a worthy alternative to you this Christmas?

How Do They Work?

Both the CommBank Neo card and NAB StraightUp card are marketed as interest free credit cards. That means, unlike traditional credit cards, they don’t charge interest when you carry a balance – but they do charge a monthly fee dependent on your credit limit.

With the CommBank Neo card, you would pay a:

  • $12 monthly fee on a card with a $1,000 credit limit
  • $18 monthly fee on a card with a $2,000 credit limit
  • $22 monthly fee on a card with a $3,000 credit limit

With the NAB StraightUp card, you would pay a:

  • $10 monthly fee on a card with a $1,000 credit limit
  • $15 monthly fee on a card with a $2,000 credit limit
  • $20 monthly fee on a card with a $3,000 credit limit

When you use either card, no matter your balance, you will pay the monthly fee determined by your assigned credit limit. But, if you don’t use the card and your balance remains at zero, you will pay no fee that month.

Both cards also have no late payment fees or foreign currency fees, which could appeal to cardholders who like to shop online with international retailers, or those who travel overseas frequently.

Would either card work for you as you carry out your Christmas shopping? That really depends on how you plan to use the card.

  • You plan on spending less than $1,000, $2,000 or $3,000. Or you are happy to pay off your balance as you go to free up more of your available credit limit.
  • You will spend less in fees than you would on interest with a traditional credit card (you can use a credit card calculator to compare the two options).

Santa Says: Be Smart When Shopping Online

As we all locked down earlier this year, many of us turned to online shopping either as a way to get what we needed while we couldn’t visit bricks-and-mortar stores, or simply as a way to pass the time. But while in-person retail therapy is officially a thing again, there are still plenty of shoppers who are choosing to shop from their device in the comfort of their own home.

There’s no denying the retail landscape has changed over the past year. Which is no bad thing. Change offers both opportunity and variety. Online shoppers can take advantage of an easier way to find what they want, while often taking advantage of lower prices than those found in-store. The only problem is, fraudsters are taking advantage of this change in habits too.

According to the Australian Competition and Consumer Commission, online shopping fraud reached $2billion in 2021, and 2022 is shaping up to hit a whopping $4billion. The Commission says 96% of Australians have been exposed to a scam in the five years to 2021. That’s a scary number.

So, what can you do to stay safe as you shop online this Christmas?

  • Think before you click. Research the seller before buying anything on the site. You can usually find independent reviews online simply by Googling the name of the store and the word ‘reviews’. If you’re unsure, stick to brands you know and trust.
  • Is it too good to be true? If a seller is offering something at a price much lower than elsewhere, it may be a scam. According to Scamwatch, scam ads quote goods at much lower prices than similar items on the same or other sites.
  • Be wary when using sites such as Facebook Marketplace and Gumtree. Scamwatch reports losses on classified websites such as these have increased by 60% this year, to $4.5 million. Avoid any arrangement where the seller asks for upfront payment via money order or international wire transfer.
  • As you shop online, be sure to use strong passwords on every site that requires one. Don’t use the same password for each site.
  • Make use of the security features offered on your credit cards. Most card providers offer zero liability for fraud, but you will need to follow the provider’s guidelines to be eligible. You may also consider setting up a two-step authentication process when paying with card, or syncing your card to Apple Pay or Android Pay to take advantage of their additional security features, such as biometric authentication.
  • Track your transactions. Using online banking or your card’s app, carefully check each transaction listed, making sure you were the one who made it. Report any questionable transactions immediately.
  • Be aware of parcel delivery scams. Scamwatch warns of fraudulent emails that purport to be from Australia Post, which advise recipients of unpaid shipping costs for a package, prompting them to click on a link to find the shipment. This link leads to a fake Australia Post website designed to steal users’ personal and financial information.
  • Don’t buy puppies online. Lockdowns in 2020 and 2021 created a surge of people looking to buy puppies online to keep them company. Scammers took advantage, setting up fake websites and classified ads. They often ask for upfront payment and work in additional costs, such as interstate transportation costs and ‘coronavirus treatments’. Once paid, the seller ceases all contact.


Santa Says: Avoid Paying Interest

Credit cards can undoubtedly help spread the cost of Christmas. But, you have to make them work for you, and not the other way around. One of the most important things to remember when using credit cards to cover your Christmas costs is to pay off all your spending before it starts accruing interest.

As we mentioned before, that could mean taking advantage of a 0% purchase offer and paying back all your spending before the intro period ends. Alternatively, it could mean spending only what you can afford to pay back each month, paying off the full closing balance by the statement due date to benefit from your card’s interest free period.


Santa’s Quick Tips

Any last words of wisdom from Santa?

  • Opt for thoughtful gift buying this year. Don’t buy junk simply for the sake of buying something. Take time to find something the recipient will truly value.
  • If you are hosting lots of people over the Christmas period, consider asking each guest to pitch in and bring a dish.
  • Always be wary when shopping online. Check reviews on sellers you don’t know, be cautious with sellers that advertise via social media, and don’t click on any unsolicited links that ask you to provide your personal details.
  • Avoid buying everything last minute. Not only are you likely to buy something just for the sake of it, you are also likely to spend more in the process. Make a list that fits your budget – and stick to both.

Photo source: Shutterstock


Pauline Hatch

Pauline is a personal finance expert at, with 8 years in money, budgeting and property reporting under her belt. Pauline is passionate about seeing Aussies win by making their money – and their credit cards – work smarter, harder and bigger.

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