KIS Bridging Loans
Presented by KIS Finance

Christmas is generally the most expensive time of year for most families and households. It’s easy to get sucked into the festivities and end up spending money that you can’t afford, resorting yourself to credit cards, personal loans, and Buy Now Pay Later services to cover the costs. This can be especially difficult if you have young children that you don’t want to have to miss out on gifts and experiences.

With the cost of living crisis leaving even less money in people’s pockets this year, some will have no choice or will even be planning already to put everything on the credit cards and deal with it in the new year, perhaps by taking out a debt consolidation loan or other finance. If you’re heading this way, there may be some other options that you can try first.

Alternatives to try before spending on credit

Borrow from family or friends

You may feel embarrassed and find it difficult to ask to borrow money from your family or friends, but if you really want to avoid using a credit card or getting a loan, it may be the best option. They won’t charge you interest and they should be a bit more relaxed about when you pay the money back which could massively reduce the stress of borrowing.

However, you should put everything in writing to avoid any disputes further down the line. Money can be the source of a lot of family disagreements so it’s important that you both agree on the terms of the loan right from the offset and it’s also a good idea to have someone impartial witness the conversation.

Use store points for gifts

A lot of shops offer points/reward cards which means throughout the year you can collect points when you spend money in-store, which you can then exchange for vouchers and use to purchase various goods and services. You can use these vouchers to not only pay for gifts, but also food and travel to help ease all areas of Christmas spending.

Some good examples are:

  1. Tesco Clubcard – Tesco have launched a ‘faster vouchers’ scheme which means you can request vouchers for the entire value of your points balance whenever you want. These can be spent in store or online.

    You can also swap your points for vouchers for one of the Clubcard Reward partners to pay for gifts, going out or travel expenses over the Christmas period. To make the points go even further, the Clubcard Boost scheme allows you to triple the value of your vouchers with certain companies.

    Some examples are; Zizzi, Alton Towers and Uber. And for gifts you could buy a magazine subscription or hotel vouchers.

  2. Boots Advantage Card – You can collect Boots advantage card points every time you purchase something in-store or online. If you collect them through out the year, you can then use the points to purchase almost anything – they have some really good gifting options throughout December.

    They also offer discount vouchers and codes throughout the year so it is a good idea to keep an eye on them and use them to buy gifts early!

Ask for a pay advance

This may not necessarily be an option for you, but if your employer is more flexible then you may be able to ask for an advance on your December payslip to get it before Christmas. This may ease the necessity of using credit cards for every purchase leading up to Christmas.

Just bear in mind through that this may mean a much longer wait until your January payslip, so make sure that you can manage this before asking for the advance.   

Top Tips if you have to use credit to cover Christmas spending

Using credit to spread the cost of Christmas isn’t always a bad idea – it may even help to boost your credit score, but only if you manage it responsibly. Using low-interest credit options with affordable monthly repayments can actually be a really useful way of easing a very expensive time of year.

First, it is important to choose the right type of credit for your situation.

You need to compare;

  1. The interest rate and APR (Annual Percentage Rate- the amount you will repay overall for a year of borrowing)
  2. How much you will have to repay in total – you can use our secured loan calculator that provides instant results
  3. Any penalties for late or missed payments
  4. The minimum repayment amount required per week or month

Look for interest free shopping options

There are several catalogue and online shops that offer interest-free shopping, almost like using a credit card but without paying any interest. A good example of this is Littlewoods.

You can order your gifts as normal, but you won’t be charged anything up front. Instead, they offer 20 weeks of interest-free borrowing which you repay monthly. This is extended to 52 weeks for purchases over £250.

This is a much cheaper way of borrowing, as long as you plan ahead and know what you can afford to repay each month over the next year. It is important to also ensure that you can repay the full amount within the interest-free period as, if you can’t, high rates of interest may be applied after that.

0% interest credit cards

Some credit cards will offer a 0% interest introductory period. This means you can use the card for your Christmas spending and you won’t be charged any interest as long as you pay the money back before the interest-free period ends. This could be anywhere up to three months.

Work out how much you can afford to repay

If you are thinking of spending on a normal credit card or using an interest-free shopping service, sit down and work out exactly how much you can afford to repay each month, taking into account the interest rates if you are using a credit card or loan. You should also think about what you could afford if your mortgage, rent payments, or household bills increased or if your pay was cut.

You should always repay your credit card balance in full at the end of every month to avoid paying interest. But if you can’t afford to pay it in full after spending more in December, you should always pay at least the minimum amount required to avoid late or missed payments.  The best way to ensure this is by setting up a direct debit for the minimum amount and then pay more if you can.

Never use a payday lender

Using short-term payday loans can be very tempting especially if you have limited credit options due to a poor credit history. However, these types of loans are very expensive with an APR of anywhere up to 1,500% compared to 22.8% for a typical credit card.

Even if you feel like you have no other options, we strongly advise that you never take out a payday loan as this can just start an endless cycle of unrepayable debt.

Borrow from a credit union

Credit unions are community organisations which are run by, and for, their members.

Their aims are to provide loans at cheap rates (average rates are 1% per month and capped to 3% per month), encourage people to save regularly and to help members who need financial advice and help.

So, you can go to a credit union for more than just a loan.

Credit unions will only let you borrow what you can afford to pay back and there are no hidden charges or fees. You can also borrow the money long-term – up to 5 years on an unsecured basis and up to 10 years on a secured basis.

Use an Authorised Overdraft

If you have a current account, you may be able to arrange an authorised overdraft. As long as you stay within the overdraft limit and you don’t borrow for too long as to not build up fees, it could be a relatively cheap way of borrowing - and definitely cheaper than a payday loan.

Some banks may even offer interest-free periods too.

However, make sure that if this is your chosen option, you definitely arrange it with your bank first. If you go into an unauthorised overdraft, interest rates will be very expensive and you will be charged expensive fees on top.

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