Bad Credit Loans - The Chrismas Loan

The Myth Of The Christmas Loan
by Rachel Lane

If you think Harry Potter was going to be the most imaginative
marketing plot this Christmas, think again. Each Christmas, as
consumers look at their finances and investigate the different
sources of funding to cover their Christmas shopping, loan
companies and credit card providers polish up their marketing
tactics and customer service skills.

No doubt some of you will see an advertisement for a Christmas
loan over the next few months. Unfortunately for you, it's not
provided by a jollyvaceous (curvy and happy) bearded man in a
red, furry suit. It's more likely to be a cunning marketing
initiative by a loans company designed to exploit consumer cash
concerns over Christmas.

If you need credit over Christmas - you will probably fare
better with a credit card, but if you have to take out a loan,
you'd be better off searching for a standard personal loan, on
a secured or unsecured basis. There are plenty of sites which
offer price comparison services for credit cards and loans. The
most popular ones include moneynet, moneysupermarket and
lowermybills, but if you really want the best deal - why not
visit them all and cross-reference the fairest deal.

When searching for a credit card - there are several things you
need to consider. Firstly, you may wish to transfer existing
debt from your old credit card, by taking advantage of an
introductory interest free period on a new credit card. Despite
the apparent 0% interest rate on all balance transfers - do
ensure that you are genuinely being charged no interest and
that once the interest free period is over - you're not going
to be hit by an unusually high APR (Annual Percentage Rate) -
the interest rate. Also look out for additional charges and
hidden fees on the credit card and make sure you have set up
your account for minimum repayments.

Credit cards offer you greater flexibility in your repayments
than personal loans, though credit cards may be sold with
higher rates of interest. You can pay off the balance on your
credit card early without a charge and as long as you track
what you're buying on plastic and set up minimum repayments,
you're likely to manage the debt effectively. However, do bear
in mind that late repayments and fines may affect your credit
history, so don't assume that just because you can't see the
debt that it isn't there.

Personal loans can be a suitable credit solution - if you need
to make the repayments over a longer period. However, you need
to be realistic about the total repayments - firstly, that you
can afford them and secondly - that you're prepared to make all
of them. For example, if you decide half-way through the term of
the loan that you could actually afford to pay it off in full,
you should be aware that there will probably be an early
repayment charge which may bring the amount to the same as the
total number of repayments.

Credit is for life, not just for Christmas; what you pile on to
plastic in December may lead to a significant financial hangover
in January. The best thing you can do is plan your shopping in
advance, shop around (including online) and stick to your list
of what you intend to buy - no impulse purchases!

Resources

http://www.moneynet.co.uk/loans/index.shtml Price comparison
research for loans

http://www.moneynet.co.uk/personal-loan-guide/index.shtml
Personal loan consumer guide

Rachel writes for the personal finance blog
Cashzilla - a mighty personalfinanosaurus living in the hills
around Edinburgh. http://www.cashzilla.co.uk Contact details:
Rachel Lane E-mail: rachel@positiveinterest.com Phone: 0131 561
2251