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Credit card Christmas: Over half of UK’s festive shoppers will rely on plastic this year

08 December 2014

Gocompare.com issues top tips for effective credit card use.

  • Festive shoppers will take three months to clear Christmas credit card debt
  • A third of credit card spenders admit they would have to spend less this Christmas if not for credit
  • 38% of Xmas credit card shoppers expect to have card debts for most of 2015

Just over half (51%) of Christmas shoppers will be relying on credit cards to cover the cost of their festive spending this year, and on average it will take three months to repay the debt.

While 44% of credit card users said that they expected to repay their Christmas debt by the end of January (within one month), 68% estimate that they will have fully repaid within three months, 23% reckon it will take three to six months, while 9% think that it will take over six months to clear their borrowing.     

The research into Britain’s festive credit card and store card spending, commissioned by Gocompare.com Money, revealed wide regional differences in the length of time expected to pay-off Christmas spending:

Region

Average time to repay

Estimated length of repayment

Within a month (%)

Up to 3 months (%)

Up to 3 to 6 months (%)

Over 6 months (%)

National Average

3 months

44

68

23

9

North East

3 months

44

61

39

0

North West

4 months

40

66

16

18

Yorkshire & The Humber

3 months

44

62

24

15

East Midlands

4 months

40

58

22

20

West Midlands

4 months

33

54

32

14

East

3 months

42

76

18

6

London

3 months

45

68

25

7

South East

3 months

45

68

25

7

South West

2 months

65

87

13

0

Wales

3 months

52

82

11

8

Scotland

3 months

35

75

18

7



The survey also found that this Christmas 43% of shoppers will buy presents on their credit card and 14% will use a store card. For many (57%) of those surveyed, plastic cards help to spread the cost of Christmas, with over a third saying that if they didn’t use them they would have to spend a lot less. One in three Christmas shoppers said that the only way they could afford their festive spending was by using a credit or store card. 

The survey also revealed that 63% pay by credit card for the added protection it gives for purchases over £100* while 59% use a credit card to build up loyalty or reward points.

Commenting on the research findings, Matt Sanders, Gocompare.com’s banking and credit card spokesperson said: “For many Christmas shoppers, credit cards are an effective way to spread the cost of buying presents, festive food and treats. And, it’s clear from our survey, that many people are aware of the extra consumer protection paying by credit card affords items costing over £100.

“However, when putting Christmas spending on plastic cards, it’s important to remember that you are essentially borrowing money - so don’t spend more than you can afford to repay. Most cards come with an interest-free period of up to 59 days. So, if you pay off your bill in full each month, you pay no interest. But if you can’t, card issuers add interest to your outstanding debt so the longer you take to repay your spending, the more money you will owe.”

  1. Take control:
    When your credit or store card statement arrives, don’t ignore it - your debt will increase as interest is added each month to the outstanding balance.
  2. Don’t just repay the minimum amount:
    Card issuers add interest to any outstanding balance, so the longer you take to repay your debt, the more you will owe. For example, it could take up to 15 years and 6 months to repay a debt of £2,000 if you only make the minimum repayment each month.**
  3. If you have more than one card, pay off the most expensive card first:
    Make a list of all your unpaid credit and store card balances and corresponding interest rates and then pay down the card with the highest interest rate first.
  4. Switch:
    Transfer your credit card balance to a card with an extended interest free period on balance transfers – these usually charge a balance transfer fee of around 3%, which will initially be added to the debt, but is still worth doing if you can get 0% interest for a number of months, with some cards offering interest free periods on balance transfers for as much as 29 months. If you are unlikely to repay a significant part of your debt during the 0% interest free period, switch 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 paid off.
  5. Avoid fees for missing your payments and for cash:
    Typically card issuers charge for missed payments - avoid using your credit card as a cash card – the additional charges make this an expensive way to borrow money.
  6. Don’t suffer in silence:
    If you’ve tried everything, or even if you’re just not sure what to do about your debt, it’s worth seeking advice. Talk to your card issuer, your local Citizens Advice Bureau, or a debt advice charity.

-ends-

Notes to editors:

On 14 - 18 November 2014 an online survey was conducted among 2,004 randomly selected British adults age 18+ who are also Springboard United Kingdom Community members. The margin of error—which measures sampling variability—is +/- 2.2%, 19 times out of 20. The results have been statistically weighted according to the most current data on age, gender, region, and education from the most recent census data, to ensure the sample is representative of the entire adult population of the UK. Discrepancies in or between totals are due to rounding.

*Section 75 of the Consumer Credit Act covers any purchases between £100 and £30,000 made with your credit card. This applies if your goods are faulty or the services you've paid for aren't provided. The same applies when paying for a holiday - unlike debit cards, with credit cards you're given a safety net if anything goes wrong. If your goods are faulty or they never arrive, the Act will provide cover - this even applies when buying goods from abroad or if the retailer goes into administration

**Based on a £2,000 balance on a card charging 18.9% APR with a minimum monthly repayment of 3%.