Debt Threat Closes In For Black Friday Bargain Hunters - Keep That Credit Card Locked Up And Wait For The Sales

25th November 2024

As Black Friday and Cyber Monday edge closer, bargain hunters may turn to short-term credit to cover the expense.

Moneyfactscompare.co.uk highlights the cost of the festive spend and compares the top 0% balance transfer credit cards for spenders who may need to shift their debts.

Shoppers using a typical credit card charging 24.9% APR must not allow small debts to hang overhead for long.

A debt of £300 would take over a year to pay off based on a fixed repayment of £20 and would cost £55 in interest. Increasing this payment to £50 per month would clear the debt in seven months, and more than halve the interest charged (£21).

Using an overdraft to cover costs is an expensive option; many of the biggest brands charge almost 40% EAR. However, shoppers who make a money transfer from a credit card to get back in the black could spread their spend over a whole 12 months for a small fee.

Consumers looking to transfer debts to an interest-free balance transfer credit card will find the longest deal for new customers is 30 months, from HSBC, which stole the lead position this month.

According to a UK study by YouGov, almost one in three people are likely to make a purchase during Black Friday sales events and almost one in five are likely to make a purchase during Cyber Monday (19%). Meanwhile, two in five Black Friday and Cyber Monday shoppers agree they hold off on making luxury purchases in the hope they will go on sale
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Despite economic challenges, YouGov also revealed 72% of Christmas gift buyers in Britain plan to spend the same amount or more than last year, while 21% anticipate they will spend less. Those who exchanged gifts during the Christmas period last year spent £320 on average.

Rachel Springall, Finance Expert at Moneyfactscompare.co.uk, said, "Consumers waiting to make expensive purchases will no doubt be eyeing up the Black Friday and Cyber Monday sales. However, it's vital to take a step back to ensure they can comfortably afford any purchases or have a sensible repayment plan in place to cover the costs, particularly if they are buying electronics.

A credit card is a good choice as these protect shoppers who may be ripped off in the splurge of sales, as any goods or services not received which are valued over £100 up to £30,000 are covered under section 75 of the Consumer Credit Act.

"A balance transfer credit card could be attractive in the aftermath of these sales, and thankfully there are plenty of providers who have interest-free terms, one of which has a deal of up to 30-months on offer. Those who are using their overdraft as a short-term solution for any overspending could also do a money transfer from a credit card, to get back in the black and spread the cost interest-free for a whole year, subject to paying a small upfront fee.

The cost of Christmas is estimated to be more than £300, according to YouGov, so consumers may well need to take out short-term credit to cover this if they have no additional savings in place.

"Consumers who feel they lack a positive financial footprint would be wise to check their credit report and explore ways to build their credit history, such as by using a credit repair card. A credit report could also reveal discrepancies for those who have had experience with short-term credit in the past, which may have a negative impact on their score if not corrected. Providers look more favourably on consumers who can prove they are sensible with any debts, but no one is guaranteed to get the top deals. This makes it essential to shop around but be conscious not to run too many credit checks when looking for short-term credit."