New research into the nation’s Christmas spending plans, reveals that on average we expect to fork-out £367 over the festive period on food, drink, presents, parties and greetings cards, but 23% say they will need to borrow money on a credit or store card to pay for it.*
The research, commissioned by price comparison website Gocompare.com, looked at the amount people estimate that they will spend celebrating Christmas:
- 34% of those surveyed think that they will spend up to £200;
- 29% expect to spend between £201 and £400;
- 22% expect to spend between £401 and £750;
- 12% estimate they will spend in excess of £750.
When asked how they expect to pay for Christmas, 58% of those surveyed said that they will meet the cost from their everyday income or savings; with 28% saying they have saved up a specific ‘Christmas fund’. However, 23% of people said they plan to borrow money using their store or credit card, with 7% saying they will need to borrow money to cover the entire cost of Christmas.
Festive fundraising also means:
- 10% will pay for Christmas by selling something that they no-longer need;
- 9% will use their bank overdraft;
- 7% will borrow money from a friend or family member;
- 2% will go to a payday lender.
Matt Sanders, Gocompare.com’s credit card expert commented, “Christmas is the time of year when friends and family gather together to celebrate and exchange gifts. However, the festive season can add a significant burden on those who are already struggling to make ends meet. Our survey suggests that many people will either go overdrawn or run up credit or store card debts simply to celebrate Christmas.
“If your Christmas spending plans rely on borrowing money, there are more cost effective options available, if you do your homework and shop-around. Now is the time to start planning if you think you will be unable to repay all of your Christmas debt in the New Year.
“A lot of the outstanding money owed on plastic is made up of the interest charged on outstanding payments, so a good way to reduce your post-Christmas debt is to switch credit and store card debts to a 0% balance transfer deal. These usually charge a small balance transfer fee of around 3% of the balance transferred which will initially be added to the debt but, it can be still worth doing if you can get 0% interest for a period of time.
“There are currently a number of very good balance transfer credit card deals available – so it may be worthwhile adding a new card to your Christmas shopping list. Price comparison sites like Gocompare.com provide a quick and simple way of comparing the wide range of credit cards on offer. But don’t forget to pay the balance off before the end of the 0% rate or you will be charged interest.”
Matt Sanders continued: “If you’re unlikely to pay off a significant part of your debt during an interest free period a better option might be to switch your balance to a card with a low interest rate for the lifetime of the balance transferred. This will immediately reduce the interest rate until the debt is completely paid off.
“The longer you take to repay debt, the more money you will owe as card issuers add interest to any outstanding balance so, if you can, try to pay more than the minimum repayment each month.”
Notes to editors:
*On 25th November 2013, Vision Critical conducted an online survey among 2,007 randomly selected British adults who are Springboard UK panellists. The margin of error-which measures sampling variability-is +/- 2.2%. The results have been statistically weighted according to the most current education, age, gender and regional data to ensure samples representative of the entire adult population of United Kingdom. Discrepancies in or between totals are due to rounding.