It’s December, which means it is time to hit the beach, the cricket or satisfy our annual Christmas retail obsession.

The silly season is also the time of the year when our best-laid plans for saving for a home deposit or paying down a mortgage face their sternest test. Last year Australians raked up a massive and cumulative $29 billion in Christmas credit card spending, which one research house estimates is equivalent to $1,727 in purchases per card.

More troubling is the fact this eyewatering figure doesn’t account for the ‘buy now’ and ‘pay later’ craze the big retailers have foisted upon us chiefly to separate us from our hard-earned dollars. These modern-day layby strategies have been devised with the annual Christmas binge in mind and can leave unsuspecting consumers paying interest at a massive 30-40% annually following the interest-free period.

Moreover, the cardholders are charging the retailer an extra 10-12% for the privilege of offering a buy now and pay later facility to consumers. Ultimately, these hidden costs are built into the retail price we pay for the television or toy.

The best way, in my opinion, to stem the cash burn at Christmas is to have a budget that enables us to work out what we can afford to spend. Once you hit your budget threshold, you must turn off the spending tap. If you can’t afford the toy or television, now, who’s to say you’ll be able to pay it off in February when the card statement arrives.

Also, to stay out of the festive season credit trap, try and pay cash where possible. By using cash, you also might be better placed to negotiate a bargain deal on your Christmas gifts.

If you are forced to use credit, then choose a no-frills card that doesn’t have bells and whistles such as interest-free days or rewards points. A low rate card such as Community First Credit Union’s McGrath Pink Visa Card from 8.99% p.a., is infinitely cheaper than 30-40% charged by the buy now, pay later strategies that can tie you up in financial knots and inhibit your real estate plans.

If you find you are left with a credit card hangover in the New Year, be sure to give Our Broker a call on 1800 913 677. We can help with several debt busting strategies including a debt consolidation, which you can help get your real estate plans back on track for 2019.