Many Will End Up With Christmas Debts

Many are struggling to finance Christmas this year, whether it be Christmas presents, food or other festivities, costs are causing more to take on debts that they will be hard pressed to repay.

According to uSwitch.com, over 60% of people are struggling to pay for Christmas this year and over a quarter will end up with debts because of Christmas spending.

On average the festive financial hangover will last almost 6 months as people strive to pay off their Christmas bills, but almost one in ten will still be clearing their debts next Christmas.

In order to put presents under the tree and food on the table, more than half will dip into their savings while over a third of savvy consumers will use up hard-earned shopping vouchers or reward points.

Of particular concern though is that over 40% will have Christmas on credit this year, with 4% taking out new credit especially to fund Christmas.

A further 16% will sell possessions in order to get the Christmas cash they need and 3% will borrow from friends and family (although with personal finances under pressure, many friends will not be in a position to lend money even if they want to).

Michael Ossei, personal finance expert at uSwitch.com, says: “If you’re struggling with your festive finances, and are thinking of turning to credit, I would urge you to use credit cards sensibly. Putting your spending on a card with 0% on purchases could give you some breathing space.

“The Tesco credit card gives you 15 months at 0% – meaning you can save up until March 2013 to pay off your bills. Or, if you can afford to clear your bills in full every month, a card offering cash back or rewards could help pay for next Christmas.

“And if you’re struggling to clear existing debt, transferring existing credit card balances to a leading balance transfer card, such as the Barclaycard Platinum Extended Balance Transfer card, could save you around £600 over 22 months.”

MoneyHighStreet comments: “The whole Christmas buying experience can easily get out of hand as people spend huge sums of money. Not only are some risking being in debt next Christmas, they are still in debt from last Christmas.

“Spending money that you don’t have and resorting to borrowing money can be a disaster unless you take time to ensure you can realistically afford to repay the loan or perhaps credit card at an agreed point in time.

“Using a credit card may seem attractive, particularly if you have a 0% purchases deal for a time, however, your balance will need to be paid off. Make sure you can do this without risking falling into debt.

“If you are concerned that your debt is getting out of control, the sooner you take action to get it back under control the better. It is unlikely to go away without concerted action, if need be seek professional debt advice.”