Almost 90% of Brits face Christmas debt
Flashing the plastic at Christmas has left nearly nine in 10 people with credit card debt in the New Year, new research has revealed.
Consumers spent almost £11 billion on their credit cards to fund the cost of Christmas and carry an average debt of £636, according to price comparison and switching site uSwitch.com.
More than half (52%) of those polled expect to be paying off this year’s festive debt until Christmas 2017 and almost eight million Brits (15%) are still paying off last year’s Christmas bills.
Buoyed by the festive good spirit, 19% of consumers spent more than they can afford, with one in six getting into debt simply to afford Christmas presents for family and friends. One in four just couldn’t let their family down when it came to providing a merry Christmas.
Worryingly, one in 10 consumers say they cannot imagine every being debt-free.
Tashema Jackson, money expert at uSwitch.com, says: “Right now millions of Brits are suffering from festive financial hangovers. While it may be hard to see an end in sight, the worst thing people in debt can do right now is stick their head in the sand.
“As well as reining in spending, using the right products is an easy way to keep your bills down. For example, savvy shoppers who clear their credit card balance in full each month should consider cashback cards to help make back that little bit extra.
“For those with longer-term debt, cards offering 0% interest on balance transfers could provide some welcome relief, and a little longer to get on top of their debt – with interest-free periods over 40 months now available.
“If you feel like your credit card woes are out of control, help is at hand. Charities such as StepChange offer free and impartial advice to help get your debt under control.”
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.