3 tips to manage this year’s holiday credit card spending

With millions of Australians expected to use a credit card over the Christmas period, these simple hacks can help you save on costs.

New research from Finder has found more than 1 in 10 Australians (11%) plan to use a credit card to fund most of this year's holiday season costs.

The rising cost of living has already led to people relying on credit cards more in 2023.

And unless you pay off your card each time you get a statement, there is a risk of expensive interest charges and ongoing debt.

So, if you are using a credit card to pay for presents and other seasonal costs, these 3 hacks can help make it manageable.

1. Get an instalment plan

Most credit cards in Australian now offer instalment plans for purchases or part of your balance.

These plans break your spending down into fixed repayments over a set term, such as 3-6 months.

They also tend to offer promotional 0% or low interest rates, which can make an instalment plan a cheaper option – even when there's a setup fee.

But research from ANZ has found 30% of Australians don't know this option exists on credit cards.

"Being able to break down a big purchase with an instalment plan may help your monthly budget or ease a short-term cash crunch," ANZ wealth advisor Liana Cauchi said in an interview with Finder.

"ANZ Instalment Plans, for example, allow eligible customers to enrol credit card purchases over $100… repaying it at a pace that suits them – over three, six, or twelve months."

2. Use reward points to help save on costs

Reward and frequent flyer credit cards are very popular, with Finder research showing it was the main reason 38% of Australians got their most recent card.

So it's worth checking your reward account (or accounts) to see how many points you have and what rewards could help cover seasonal costs.

For example, ANZ reported that the highest redemption categories for its rewards program were:

• Gift cards
• Cashback
• Airline point transfers

Any of these rewards could help with costs at this time of year.

While flight rewards typically offer the highest value per point, availability for frequent flyer reward flights can be limited at peak times.

But gift cards and cashback type rewards could make a big difference at this time of year.

Most reward programs also offer a range of retail items that could work as gifts.

Just keep in mind retail items typically offer the least rewards value, and may take too long to be delivered for Christmas.

If you don't have enough points for a reward right now, Cauchi said another way to get future savings is to "use your card for everyday expenses like groceries and general health."

"This way, you could earn points on things you would have paid for anyway and then take the benefit of the points by redeeming them for the things you want."

It could even help you get enough points in time to book frequent flyer reward flights for next Christmas.

3. Make use of an interest-free period

Most credit cards offer interest-free days on purchases if you repay the total amount listed on each statement.

This could give you a bit of breathing space over the holiday period, depending on when your next statement is due.

But if you need more time, another option is to consider getting a new credit card that offers an introductory 0% interest rate on purchases.

Depending on the offer, this could give you 6-12 months or more to pay off holiday season purchases with no interest.

After the introductory period, the card's ongoing interest rate will be charged if you're still repaying what you spent.

So it's a good idea to plan your repayments. And, if you can, pay more than the minimum amount listed on each statement even when the purchases are interest-free.