If you’ve noticed more ads for credit cards during the past few weeks you’d be right. They’re everywhere: online, in newspapers, on the tele and in your letterbox. “Simply complete and return the attached form in the reply paid envelope or go to our website,” the friendly offer suggests.


Why are the banks suddenly being so generous? Don’t be fooled. They know this is the time of the year when we’re all out spending and if cash is tight, we’ll turn to the magic plastic to get us through.


The trouble is we’re not always clever about how we use our credit cards or even which credit cards we use. So if you want to out-smart the banks this festive season and start 2012 with a lot less debt, here’s the Your Money Magazine list of credit card deals you should avoid this Christmas.


  1. Honeymoons lead to hangovers


The latest offer being peddled by the banks that you should refuse is the discounted or honeymoon purchase rate. Sign up to one of these deals by the end of January 2012 and you can fill your new card up to its purchase limit with interest charged at an incredibly generous 1% or 0% or the like for the first few months.


The problem comes when the honeymoon is over and the rate on any outstanding balance leaps to an enormous 20% or even higher.


  • Commonwealth Bank Low Fee Mastercard: is currently offering a honeymoon rate of 1% pa on purchases for five months if you apply by 27 January 2012 plus $50 cash back if you make your first purchase within first 30 days. The rate goes up to 20.24% pa at the end of the five months. Let’s say you end up owing $5,000.00 on the card at the end of the five months. If you make the minimum monthly repayment of $100.00, it will take over 70 years to repay the debt and cost over $24,000 interest. That’s a lot of gift wrap and tinsel.


  • Virgin Flyer Credit Card is currently offering 0% on purchases for the first six months but then the rate goes up to a staggering 20.99%. The numbers will be scary if you can’t pay back the whole amount you spend within the six months.


Some of the other “purchase rate honeymoon” deals on offer have much lower rates at the end of the deal. If you do want to sign up to one of these special offers, consider:


  • Citibank Clear Platinum (0% for six months then 11.99%)


  • ANZ Low Rate Mastercard (0% for three months, then 13.24%)


  • NAB Low Rate Visa (2.99% for 12 months then 13.49%)


  1. Put that balance transfer card in the deep freeze


If you’ve signed up to a balance transfer deal, resist using the card to make new purchases over Christmas. Balance transfer deals can be a great way to get rid of your credit card debt but they come with a long list of “dos and don’ts”. Do make sure you can pay off your whole debt within the transfer deal and DON’T under any circumstances (even Christmas) use the card to make new purchases. If you do go shopping with a balance transfer card, several mean, nasty ‘scroogy’ things will happen:


  • You’ll end up paying a much higher rate on the new purchases (as high as 22%)


  • Any repayments you make will come off the new purchases at the higher rate first NOT off your transferred balance


  • This can mean you won’t reach your goal of paying off your whole debt within the balance transfer period and


  • You’ll end up paying a much higher rate on interest on a bigger balance. How’s that for a Christmas surprise?


  1. Bonus points not such a bonanza


Everyone’s offering bonus reward points in the count-down to Christmas but are they really good value for money? That depends on what sort of card you use, how much you spend and whether or not you pay interest.


Here’s the golden rule. Unless you pay off your whole credit card balance within the interest-free period (usually 55 days) don’t bother with reward programs. You’ll never get more back from rewards than you’ll pay out in interest. You’re better off with a low-rate, low-fee card, no matter how much you enjoy flashing around your bling at the DJ’s counter.


  1. So how low can you go?


The good news is there are some low-rate cards that will get you through the Christmas cash crunch without costing you a fortune for many unhappy new years to come. Here are a few of the best low-rate credit card deals currently on offer that won’t give you any hidden, nasty surprises in 2012.


  • Community First Credit Union McGrath Pink Visa 10.49% ongoing with $40 annual fee


  • Greater Building Society Greater Visa 10.74% ongoing with a $30 annual fee


  • Bank MECU Low Rate Credit Card 10.74% ongoing with $59 annual fee


  • Bankwest Breeze 10.99% with $69 annual fee


Happy shopping.