Christmas spending will leave a quarter in the red
With six in ten people (62%) struggling to pay for Christmas this year, Brits face a New Year blighted with debt according to new research from uSwitch.com, the independent price comparison and switching service. Over a quarter of people (27%) will end up in the red because of Christmas spending with the average post-Christmas debt adding up to an eye-watering £274.
However, of those who will be getting in debt this Christmas, more than a quarter (27%) could end up with over £300 of debt. 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 (8%) will still be clearing their debts next Christmas.
Following a year of rising living costs and pay freezes, almost half of consumers (48%) are more worried about how they will pay for this Christmas than last year. The same number (48%) say that they have less money this Christmas than last and a third (36%) expect this Christmas to be a much more frugal one than in recent years. And the recent squeeze on finances has left people ill-prepared for the festive season. One third (34%) have not been able to save for Christmas over the year.
In order to put presents under the tree and food on the table, more than half (52%) will dip into their savings while over a third of savvy consumers (36%) will use up hard-earned shopping vouchers or reward points. But worryingly, more than four in ten (42%) will have Christmas on credit this year - 4% will even take 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 over half (51%) have budgeted, things are so bad that one in ten (10%) have no idea how they will pay for Christmas this year.
Michael Ossei, personal finance expert at uSwitch.com, says: "Cash-strapped consumers will be feeling a little short of Christmas cheer after another tough financial year. While the cost of living has rocketed, pay has been frozen or even cut and even those who have enjoyed a pay rise will have seen the benefits eroded as household bills soared. Splashing the cash at this time of year is very tempting, but for those already feeling the pinch a very merry Christmas could lead to a financial hangover that lasts well into next year.
"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."
For more information visit uSwitch.com.