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Your money: How to fund the frenzy

Virginia Robins
Saturday 14 December 1996 19:02 EST
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Christmas can mean spending until it hurts and financial headaches as painful as any mulled wine or sherry-inspired hangover.

A survey by the Woolwich Building Society reveals that people expect to spend about pounds 500 this Christmas on presents, food, drinks and entertaining. But two thirds of respondents haven't put any money aside.

In another survey, by NOP, 70 per cent of those questioned admitted that they splashed out far more than originally inten-ded. Men were planning to spend up to pounds 130 on gifts such as jewellery for their partners, while women aimed to spend just below pounds 80 on clothes and music.

If you don't have the cash, there are some steps that can be taken to finance a buying frenzy:

A personal loan is good for long-term borrowing. Midland charges 16.9 per cent APR on a pounds 500 loan, equal to pounds 87.50 a month for six months.

For short-term loans, customers can benefit from an interest-free period of up to 56 days on credit cards. Alternatively, the same overdraft through a Lloyds Bank Classic Account would incur an APR rate of 18.8 per cent, or 1.45 per cent monthly, plus a monthly pounds 8 fee. Many building societies are cheaper.

Some stores offer interest-free options. Dixons has interest-free credit over a fixed period, and a six- to 12-month Buy-Now-Pay-Later scheme. This involves a 20 per cent deposit on a purchase with a minimum cost of pounds 100. At the end of the period, interest is charged at 27.8 per cent APR.

Harrods' same-day storecard has a credit limit of pounds 500 and an APR of 29.6 per cent, or interest-free credit on purchases above pounds 500.

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