The first month of the third quarter is about to end, which means savings for your Christmas budget should speed up now. Perhaps you never realised, but Christmas expenses account for a salary at least worth a quarter. If you track all your expenses for Christmas, it will take you by surprise because the total sent money will be more than double what you expected. Most of the people start setting aside money a couple of months before Christmas, and yet they struggle to have sufficient cash to meet their expenses.
Even though you chip away at decoration and large gatherings, you find that your savings do not back you. Of course, you will have to rely on borrowing. There are various borrowing methods to meet your Christmas expenses, and each of them can prove to be beneficial for you. All types of borrowing methods let you borrow up to £1,000. However, they are all paid back in one go, so it is vital to ensure that you can repay the debt on time. Many people struggle to keep up with payments and then fall into an abyss of debt.
Ways to Borrow Money for Christmas
Although most lenders say that they can offer up to £1,000, the fact is that it is in the rare case that the lending sum will hit this figure. Mostly, lenders cap on £500 in order to ensure that you do not struggle to pay back the debt on time.
Christmas loans are similar to payday loans. They can cover all kinds of expenses including utility bills and other kinds of emergencies. The maximum amount lenders can offer is up to £1,000, but having said earlier, many lenders will not let you borrow more than £500. Christmas loans carry very high interest rates, so make sure you do not borrow more than you need. For instance, if you need only £300, you should not make the mistake of borrowing more than that.
Do not forget that you will have to pay interest on top of what you borrow. There is no point in borrowing more than you can actually afford. You will end up paying through your nose if you throw caution to the wind. Christmas loans are the most convenient loans and more affordable than some other alternatives like overdrafts. However, many people using Christmas loans are those who have poor credit histories. Christmas loans for bad credit carry even higher interest rates. You should look out for your repaying capacity before using them. A lump sum payment can make it a bit harder for you to settle the debt on time.
Overdrafts may also prove to be a good way to fund Christmas expenses only when you know you will have arranged enough cash soon to replenish the withdrawal beyond the limit. Overdrafts are more expensive than Christmas loans. They charge an overdraft penalty by the day, which will be even higher than bad credit Christmas loans. Never forget that an overdraft shows up in your credit file. It will lower your credit points, so make sure that you do not slip into the habit of relying on overdrafts whenever your savings fall short of cash. Overdraft should be the last resort. As long as you have another alternative to pay back, you should use that. Try to choose the one which costs you the lowest amount.
Credit cards prove to be a saviour when you have your back against the wall. No alternative is more convenient than a credit card when you have instant access to cash. Whether you need money for Christmas decorations or presents, you can make a purchase through your credit card. The good thing about them is that you have the freedom to use money based on the credit card limit.
However, bear in mind the whole balance is paid back in a lump sum within the interest-free period, so if the grace period expires, you will end up paying a lot of interest. Credit cards are most preferred when it comes to borrowing money for Christmas because you can avoid paying interest provided the balance has been paid off. There are some credit cards that allow payments in instalments without nominal interest rates. Use that credit card if you have any. Because payments will be spread across, you will find it much more manageable.
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Buy now, pay later schemes are offered by stores. You can buy anything, including large items such as a dishwasher and microwave, using this scheme. For larger purchases, other alternatives do not help at all. Each instalment you make will go towards both the cost of the item and interest. Missing a payment is not recommended because doing so will cost you additional fees. At the time of choosing to buy now pay later schemes, you should carefully focus on the interest rates you are being charged. Most of the time, you do not realise that you are paying more than the interest you pay on personal loans. You are recommended to compare interest rates and associated charges before choosing any alternative.
If you need a small amount of money, payday loans can be fruitful. The maximum size of these loans is up to £500. They are ideal when your savings fall short of cash, and you need money at once. Payday loans do not run a credit check, and therefore, the lending decision is solely made based on the financial details you provide. Make sure you are honest by providing financial details to them. As the risk is too high to lend you money, you will be charged very high interest rates.
The Final Word
You should try to create a Christmas budget to meet all your expenses during the festival. Make sure you start saving several months before starting the preparations. Even so, you may feel the need for an immediate injection of cash. For that, you may rely on various types of funding sources such as payday loans, Christmas loans, overdrafts, payday loans, and credit cards.