Running up debt

Alert on festive credit

CASH- STRAPPED Australians are being warned off dangerous interest-free credit card deals arriving just in time for the Christmas shopping splurge.

Lenders are targeting consumers with interest-free credit card offers where no charges apply to purchases for periods up to 14 months.

This means consumers don’t have to pay back the debt in full until 2019.

Virgin Money this week extended its interest-free credit card offer on new purchases from 12 to 14 months — the longest period available without getting hit by interest — a timely move before the peak shopping period.

But experts, including financial comparison website RateCity’s spokeswoman Sally Tindall, have urged consumers to be wary of deals that could result in mountains of debt.

“Interest-free cards may seem like an easy way to pay for your Christmas shopping, but with rates as high as 20.74 per cent, the results can be financially disastrous,’’ Ms Tindall said. “Work out exactly how much debt you can afford to get into and make sure you don’t put an extra cent on the card.”

The Virgin deal requires customers to make minimum monthly repayments on the debt before the interest rate jumps from zero to 20.74 per cent once the 14-month period ends.

Virgin Money’s spokeswoman Danielle Williams said the deal, which attracts a $129 annual fee, was “timed intentionally when retail spending across the country increases.”

Reserve Bank of Australia figures show Australians owe a massive $51.4 billion on credit cards and $31.4 billion is accruing interest — the lowest level of interest-accruing debt since 2008.