How to splurge intelligently this Christmas

VAT is going up to 20 per cent on 4 January, so this year don’t wait for the sales to get your big purchases in.

According to Santander, 28 per cent of Brits are planning on a pre tax hike spending spree, with people in the South East expecting to spend £840 each on average. With many retailers likely to phase in price increases before the tax actually goes up, it is probably best to buy as early as you can.

Particularly good choices are big ticket items like cars or laptop computers, as well as expensive electrical appliances and even home improvements, all of which will see the rate of VAT go up by 2.5 per cent. If you have a gym or golf course membership it might also be a good idea to pay before the tax rate goes up.

With many in the City keen to engage in a bit of retail therapy this Christmas, many credit cards are undoubtedly going to get maxed out and many more not paid off that quickly come January.

It makes sense to take some time to be sure you’re getting the best deal you can from your credit card. Here are three of the best options:

Barclaycard platinum – Use contactless technology to pay for your coffee in the morning. Zero per cent interest on purchases for the first three months will help ease the pain of your Christmas overspend.

Virgin credit card – Positive payment hierarchy, meaning that you pay off your high interest rate balances before your interest free transferred balance, which lasts 16 months.
l Nationwide gold card – commission free purchases abroad and a free twelve month extended warranty on electrical and gas goods.

Try using social deal finding sites like Groupon or Keynoir for some slightly innovative (and cheap) presents.

Groupon launched in Chicago in 2008 and has spread rapidly across the world, including to over 30 British cities. The idea is to get groups together to use their purchasing power to get deals. Every day, it advertises a deal in a particular city with a countdown timer.

You sign up for any deal using a credit card and if enough other people also sign up, then you are charged and given a coupon. Deals can be given as gifts, making it a cost-effective way to give someone a treat like a fancy restaurant meal or a trip to the zoo. Today’s Groupon deal is a spa break for two with a massage and overnight stay at a Thistle hotel for £119 instead of £350.

Keynoir has a similar business model, but it is a little classier – the Marks and Spencer of deal sites you might say. Its deals are handpicked and 40 per cent of them are exclusive.