Put the bite on your Christmas shopping

GO ON, be a Scrooge this Christmas - everybody else will be. Got some reward points? There's a start: use your credit card to shop by claiming, not earning, reward points.

Unless you have a platinum card, that is. Did you know it almost certainly comes with a cheapest-price guarantee?

''The price guarantee scheme offers cardholders a refund of the difference between the cost of an item they paid and if they find it cheaper or it goes on sale,'' says a spokeswoman for ratecity.com.au, Michelle Hutchison.

You might as well get something for the $150 annual fee you're probably paying.

Anyway, there's a treasure trove of Christmas gifts in reward programs that can save you from spending, and nobody need be the wiser. I won't let on, promise.

''Points are often just parked by cardholders, but they can be a useful way of buying gifts over the festive season,'' Canstar financial analyst, Adam Beu, says.

At worst, you could give a shopping voucher, or cash it in and buy a present for less, naturally.

CREDIT WHERE IT'S DUE

Not enough reward points and strapped for cash? Oh dear, then you'll need your credit card on which rates haven't dropped for a year, even though they have on everything else.

Never mind. You can buy all your pressies, and even a holiday somewhere, at very low interest, but you'll need to switch cards.

Citibank's Ready Credit (a sort of debit card with a loan) has a 5.9 per cent introductory offer that stretches for 18 months. Since there's not even an annual fee, it costs nothing to get one.

That said, there's no interest-free period; the meter starts the moment you spend.

Oh, and if you haven't paid it off after the 18 months, the interest jumps to the more-typical 18.99 per cent.

SWITCH'N'SAVE

Already stuck with credit card debt? No worries. The banks are offering not to charge interest for months on end if you agree to carry across your balance to one of their cards. They'll even do all the paperwork.

So before shopping for presents, shop around for the best card while there's time.

On the average credit-card balance of $3251, you would save more than $400, not counting fees, by switching to a card that charges no interest for nine months, according to creditcardfinder.com.au.

That would be an ANZ MasterCard with a $58 annual fee. Also, it reverts to the usual purchase rate (13.14 per cent), instead of the much-higher (21.49 per cent) cash-advance rate.

Then again, these deals work only if you pay the card back in the transfer period, in which case HSBC's zero per cent for eight months is even better since there's no annual fee.

''If you can't repay the balance in the [zero-interest transfer] period, switch to another card and transfer the balance again,'' a co-founder of creditcardfinder.com.au, Jeremy Cabral, says.

Since July 1, there's been no downside to balance transfers. Before then, spending anything on your new card would undo any good because repayments would go to the transferred bit first, leaving interest on the rest.

Cards originally issued - as distinct from getting a new one when the old one's expired - before July 1 come under the old rules. To its, uh, credit, NAB redirects payments to the highest-interest portion for all its cards, irrespective of when they were first issued.

Mind you, Citibank's Clear Platinum Visa manages to avoid charging interest on both transfers and new purchases, so you can have your cake and ask for another slice as well.

The double-zero rates last six months, and even the $99 annual fee - low for a platinum card, which, by the way, has the price guarantee - is discounted to $49 in the first year.

''It's probably the perfect one for Christmas,'' Cabral says.

THE CARD FOR THE AGES

Introductory and zero-interest balance transfers are all very well for the festive season, but you want a card that lasts the distance in cheapness if you're going to carry the balance over, if not add to it.

Here, it's a tradeoff between the annual fee and the interest rate. The lower one is, the higher the other tends to be.

And forget about rewards.

The lowest fee-and-rate combo is credit union Community First's Visa, with a 9.5 per cent interest rate and $40 annual fee, plus up to 55 interest-free days depending on when in the monthly billing cycle you use it.

The cheapest card without a fee, so there's no cost to getting one, is Heritage Bank's No Frills Classic Visa.

Pity, then, it charges 11.8 per cent from the second you buy since there are no interest-free days.

Better to take advantage of Citibank's Ready Credit at 5.9 per cent for 18 months, also without a fee, and then switch.

SHOP THE BENEFITS

And would you like rewards with your credit card? Thought so.

Trouble is, every point you earn for a dollar spent is worth only half a cent when you come to redeem it.

That's why the break-even point for rewards on the lowest fee-charging credit card is spending about $18,000 a year, Beu says.

With an annual fee, the rewards put you ahead only if you spend about $20,000 in a year.

But if you don't pay off the balance each month, rewards are worthless since they cost more than you get.

You would be better off with a low-rate card and forget the frills, much less any thrills.

The test is how much a $100 shopping voucher will cost. It can range from $10,000 (on the Myer Visa) to as much as $27,000 (NAB's Velocity Rewards for a Myer gift card), according to ratecity.com.au.

If free flights appeal, it's hard to beat the Qantas and Velocity Escape (which is Virgin) Amex cards since there's no annual fee.

Better still, you can earn points without running up a debt. Bankwest has a fee-free savings account with a debit card attached that has a rewards program with everything from iTunes vouchers to flights.

The story Put the bite on your Christmas shopping first appeared on The Sydney Morning Herald.

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