While a small minority save throughout the year, many people use credit cards, loans and overdrafts to fund their spending over Christmas, but end up suffering the financial consequences for the next 12 months by having to pay back the loans, often at high interest rates. If you are tempted to use one, check how much interest you will have to pay, as the average interest rate is 24. You may find it works out better financially to borrow on a standard card with a lower interest rate rather than pay through the nose on a store card as the discounts offered on these cards will be wiped out by your repayments. This means you pay no tax on the interest that is built up, so if you have spare cash in your current account, this can mean the difference between earning next to no interest and up to £150 a year. These types of accounts typically tie up your money for a fixed time, but offer a guaranteed rate of interest in return. read more

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