There's many different ways to borrow money at Christmas, and many are considerably better than others. If you're already in debt and have a bad credit rating, you might not be eligible for all of these ways to get credit. The best thing to do it call the Debt Advice Trust for free, confidential debt advice before you consider taking out further loans or credit cards.
Secured Loans vs. Unsecured Loans
You may be asked to secure your loan against your home. Often this means you will have a lower APR, but it also means you will risk losing you home should you fault the loan agreement and not keep up with payments.
Cash Loans
Know the interest and any fees involved before you sign anything. Instant cash loans often have higher interest. In order to lend you money, the lender must have a consumer credit license - don't be afraid to ask them if they do. If they don't, they could end up being what's known as a "loan shark" (people who lend money illegally, usually with extremely high interest rates).
Credit Cards
Many credit cards offer rewards, interest free periods and introduction rates - but find out what it will start costing you after the great deals have worn off.
If the card is free to join with no administration fees and an interest free period this could be a good option - provided you can pay the balance in full before the end of the interest free period.
Store Cards
Store cards of often the most expensive forms of credit. They don't usually charge joining fees, but do have extremely high interest and often lure people in with offers of getting discount off your first purchase or similar.
Bank Overdrafts
Overdrafts are a quick way to get extra money - but make sure you've authorised it by the Bank first. If you don't, you'll find yourself with large fees and charges for taking out an "unauthorised overdraft". If you know you'll need to use an overdraft at Christmas time, it might be worthwhile looking around for banks that don't charge you for your overdraft as long as you say within a certain limit, or ones with low interest.
Catalogues
Mail order catalogues that get delivered to your home often have high interest, however it isn't usually stated obviously. Find out the APR, and also compare what the normal price for the products are online or in stores first.
Credit Unions
Some credit unions will allow members to borrow double or triple the amount in the savings account you keep with them. The benefit of lending with a Credit Union is that interest rates are usually fairly low.
Local Exchange Trading Schemes (LETS)
LETS is a bartering scheme in which members buy goods with tokens, rather than cash, and can also earn tokens by providing services for other members, like house cleaning. There is no cash exchanged between members and is done on purely a "token" basis as a way of exchanging both goods and services. To find out if your area has a Local Exchange Trading Scheme, ask at your library.
Proper preparation and budgeting is the best way to get through Christmas without debt. If you do need to rely on extra funds always be careful and read all the fine print before committing to anything. For debt advice before or after Christmas, contact Debt Advice Trust.
