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How to rein in expenses ahead of the holidays

How to rein in expenses ahead of the holidays

We are on the home stretch to Christmas: a time for family gatherings, over-indulgence and hefty holiday-related expenses. Expenses can spiral out of control at this time of year as we buy gifts, host parties and go on holidays. With a little bit of planning and some creative thinking, however, you can rein in your expenses and minimise the impact on your wallet.

Make a plan

Draw up a spending plan and identify what you can afford to spend on different areas such as present buying, food shopping and entertainment. Impulse buying is a common Christmas phenomenon – having a budget can help you stick to what you can afford.

Start early

Doing your shopping early can help you avoid getting swept up in the euphoria of last-minute shopping and the trap of buying expensive gifts due to lack of time. If you start now you can also take advantage of retail sales and save money.

Be creative with gifts

Christmas is a time for giving, but you don’t have to restrict yourself to shop-bought gifts. Instead, consider making gifts, at least for extended family members, and make your own Christmas-themed biscuits, jams or preserves to give to friends and family. Greg Pride, financial adviser with Centric Wealth, suggests giving away non-monetary ‘vouchers’, such as washing the recipient’s car, cooking them a meal or doing their laundry and ironing for a week. He says: “Ask yourself, ‘do I need to spend money on presents to relay the spirit of Christmas?’”

Pay cash

Paying by cash instead of relying on credit cards eliminates interest charges on credit card purchases and keeps the lid on mounting debt. It will also help you control how much you spend and minimise impulse buying.

Remove the temptation to spend

Consider locking up some of your money in a term deposit for 30 days or more. “A lot of people will spend exactly what’s available to them so lock up some money in a term deposit is great as it removes the temptation to spend it,” says Pride. Shop around for a high interest rate and you’ll also make money in the process.

Say no to pricey activities

Pre-Christmas lunch with friends at the latest ‘hot’ restaurant or a dinner cruise? Before you know it, the financial cost of catching up with friends and family can result in a major bill. Instead, turn down offers for activities that will require you to spend a lot of money and suggest cheaper alternatives, such as picnics, lunch at home where everyone contributes a dish, or choosing BYO restaurants to rein in the bill.

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Learn more about credit cards

How to get money from a credit card

You can get money from a credit card, but generally it will cost you.

Withdrawing money from a credit card is called a cash advance, as it operates more as a loan than a simple cash withdrawal. Because it is a loan, you may be charged interest on your cash advance as soon as you make the withdrawal. Interest rates are also usually much higher for cash advances than standard credit card purchases.

In addition to the interest rate, you may also be charged a cash advance fee. This could be a flat rate, or a percentage of your total cash advance. If you are considering a cash advance, make sure to add up how much it will cost you before committing.

What is a credit card?

A credit card is a payment method which lets you pay for goods and services without using your own money. It’s essentially a short-term loan which lets you borrow the bank’s money to pay for things which you can pay back – potentially with interest – at a later date. Credit cards can also be used to withdraw money from an ATM, which is known as a cash advance. Because you’re borrowing money from a bank, credit cards charge you interest on the money you use (unless you repay the entire debt during the interest-free period). When you apply for a credit card, the bank gives you a credit limit which sets the maximum amount you can borrow using your card. Credit cards are one of the most popular methods of payments and can be a convenient way of paying for goods and services in store, online and all around the globe.

How does the Citibank credit card instalment plan work?

The Citibank credit card instalment plan is designed to help you make repayments on purchases over a predetermined period of time.It is similar to buy now, pay later services, and you can choose a plan that suits your financial situation.

You can set up a fixed payment option for up to five recent purchases each worth at least $500. Alternatively, there’s a cash-out option, where the issuer pays you between $500 and the maximum credit limit via a cheque, which can then be repaid in fixed instalments over your chosen duration.

How do credit cards work?

Think of credit cards as a short-term loan where you use the bank’s money to buy something up front and then pay for it later. Unlike a debit card which uses your own money to pay, a credit card essentially borrows the bank’s money to fund the purchase. When you apply for a credit card, the bank assesses your income and assigns you a credit limit based on what you can afford to pay back. At the end of each billing cycle, which is usually monthly, the bank will send you a statement showing the minimum amount you have to pay back, including any interest payable on the balance.