1 Make a budget

Be realistic with your expenditure this Christmas. Set a strict budget to ensure that you do not live beyond your means.

2 Steer clear of store cards

These charge interest rates of up to 29.9 per cent, making them the plastic to avoid. If a discount on your first purchase persuades you to sign up for a card, pay off the balance in full straight away before ripping up the costly plastic.

3 Apply for an interest-free credit card now

Do not delay if you want to finance your Christmas spending with a 0 per cent deal. A credit card typically takes about two weeks to land on your doormat after an application has been made.

If you take out the Sainsbury’s credit card you will have ten months to settle the bill for your Christmas spending. The rate will then rise to the standard annual percentage rate (APR) of 15.9 per cent.

4 Take out a personal loan

Northern Rock and Moneyback Bank, which is part of Alliance & Leicester, both offer rates of 5.7 per cent on loans between £1,000 and £5,000. If you do take out a personal loan, make sure that you can repay it within a year, or you could run the risk of falling into over-indebtedness.

5 Beware of pushy offers in the post

Do not be taken in by a postal credit card offer. The interest rates on these deals are typically between one and two percentage points higher than the market average. Use price comparison websites such as www.moneyfacts.co.uk to find a market-beating offer.

6 Do not pay the price for being in the red

Keep an eye on your balance if you use a bank account overdraft facility. Bank charges for accidentally exceeding an overdraft limit routinely cost £35 a time. Most accounts charge double-digit rates on overdraft borrowing. If you switch to an Alliance & Leicester Premier Direct account you will obtain a 0 per cent rate on overdraft borrowing for 12 months.

7 Consider a spending card

The Egg Money card falls halfway between a credit card and a current account. It pays 4 per cent on credit balances and typically charges 6.9 per cent for the credit facility, on which most users receive a credit limit of twice their monthly salary. Egg Money is doubling its cashback rate to 2 per cent until December 10.

8 Watch out for the payment hierarchy trap

Be prepared for a nasty surprise in January if you spend on a balance transfer credit card deal that does not offer 0 per cent on purchases. Most card companies enforce a payment hierarchy whereby repayments are steered to the cheapest debt first. If you want to spend on your plastic, you may want to consider offers such as the Capital One No-Hassle Platinum card, which has a flat rate of 6.9 per cent.

9 Think hard before insuring the Christmas spend

A safeguard against falling behind with repayments in the event of serious illness or redundancy may sound attractive, but the Financial Services Authority has found that loan and credit card payment protection policies are being sold to people who are unable to make a successful claim.

10 Be prepared next time

If everything fails and you are still left nursing the cost of Christmas in January, learn from your mistakes and set up a regular monthly savings plan to help to cover your festive spending next year.