How to survive your credit card hangover

It’s a new year and your only post is your credit card statements. With all the signs suggesting the economy is only going to get worse this year, it’s crucial to get your money matters in order now to give you some shelter from future storms.

A report by the Post Office found that 36 per cent of credit card holders - that’s 12 million people - are funding day-to-day living costs this month using their cards. If you’re one of them, make sure you’re using the cheapest card to do so - and using any savings to clear as much debt as possible.

The lowest-interest deals at the moment include Barclaycard’s platinum card. It offers two years’ interest-free on balance transfers. There is, however, a 3.2 per cent fee for moving your debt. Alternatively, the Halifax balance transfer card offers 22 months at 0 per cent interest, with a 3.5 per cent charge, or HSBC customers can secure a 23-month interest-free deal, with a 3.3 per cent fee.

Use these cards to cut the cost of your debt, and buy any necessities using an interest-free purchase product like Marks & Spencer Money’s MasterCard, Tesco Bank’s Clubcard credit card MasterCard or Halifax’s all-in-one MasterCard, all of which charge no interest on shopping for 15 months. But stay away from unnecessary splurges in the sales.

If at all possible, start putting some cash aside. Although the Bank of England base rate isn’t likely to go up this year, the eurozone crisis is making it more expensive for High Street lenders to access funds, so mortgages are becoming more expensive as a result.

Energy and other costs may also rise this year, so try to set up a regular saver account. The top deals currently include Cheshire Building Society’s Platinum Monthly Saver Issue 1, which pays five per cent until January 2013 for those who invest between £100 and £500 a month. West Brom Building Society’s Christmas Regular Saver pays 4.25 per cent until December for those who put in between £10 and £250 a month.