Trouble is on the cards

This month Britons owe £1.1 billion from Christmas shopping sprees, according to the bank Santander. Leave the debt lingering at eye-watering interest rates and you could waste thousands in interest payments.

But some banks are offering attractive deals for interest-free lending to lure consumers in, so now is the time to take action. Barclaycard has just launched the longest-ever period of 0 per cent interest offered on a credit card. Its Platinum card allows customers to move debts built up on other cards onto it, and will not charge interest for 17 months.

It does, however, like most balance transfer deals, impose a fee of 2.9 per cent of the total amount moved over. That would tot up to almost £60 to customers transferring £2,000. Those shifting £3,000 or more in January qualify for a £20 fee reduction.

Another good deal comes from MBNA. It’s slightly shorter - the interest-free period lasts 16 months - but useful for those with Barclaycards already, as you can’t shift the balance from one card to another. MBNA’s one-off transfer fee is also 2.9 per cent.

Santander reckons 1.5 million people will switch their balances to new cards in the first three months of 2011. But it’s crucial remember to pay off your debts (or - if that’s impossible, transfer your balance to a new deal) before the end of the interest-free period. At that point, rates will rocket, usually to somewhere close to 20 per cent.

Make sure you meet minimum repayments, too: missing any could mean losing the entire deal. And, if you have any savings, remember that with interest rates so low it is far better to use them to pay off debts than to keep them for a rainy day.