More than 4.2 million ‘still paying Christmas 2005 card debts’

More than 4.2 million credit card customers have still not cleared debts run up paying for last Christmas, shock research from MoneyExpert.com shows. Nearly one in eight credit card holders admits to still having debts on their cards from last Christmas as they gear up for this year’s spending spree.

Experts estimate around £11.4 billion is set to be put on plastic this festive season and MoneyExpert.com research shows the effects will be felt for a long time. The average time taken to clear credit card debts following Christmas 2005 was 2.6 months.
The good news from the independent financial comparison website’s research is that nearly half the country’s credit card holders did not put any debt on their cards from festive season spending. And another 17 per cent took a month or less to clear their balances, incurring minimal interest.

But substantial numbers were still feeling the financial effects of last Christmas well into the spring and summer of this year and it is likely it will be the same again next year, MoneyExpert.com believes. Around 1.4 million – or four per cent – took three months to clear their debts while about 355,000 only cleared their spending in September.

Sean Gardner, Chief Executive of MoneyExpert.com, said: “Christmas is a time for giving and it looks we are definitely giving our credit cards a battering over the festive season.

“It is tempting to put spending on your plastic when it comes to Christmas and the bills are mounting up. Of course everybody intends to clear the debt as soon as possible but it is evident that millions of us don’t.

“With more than four million of us still paying for last Christmas it is clear that there is a need for many of us to change our financial habits. Getting into debt is fine as long as you have the means to get out of it.”

Someone putting £1,000 on a credit card at Christmas 2005 will pay around £169 over a year in interest if their card charges an APR of 16.9 per cent. If they had transferred to a zero per cent deal no interest would be charged until the interest-free period expires. Current deals include Barclaycard, Virgin Money and Citibank offering zero per cent for a year on balance transfers.

Research shows people aged between 30 and 50 took the longest to pay off credit card debt from last Christmas – an average of 3.3 months compared with the national average of 2.6 months. The over-50s took less than two months.

Across the country people in the Midlands and Wales took 3.18 months – the longest time to clear their debts – while Scots were the quickest at 2.14 months.