Brits' Christmas spending could mean a decade of debt

If they’re not careful, Brits funding Christmas with a credit card could face debts that hang around long after the decorations come down.

Cardholders who only ever make the minimum repayment against their Christmas spending could be faced with a debt sentence which lasts until July 2017.

Credit card users will spend an average of £360 on their cards this Christmas. Someone who spends this amount on a credit card with a typical APR of 15.9 per cent – such as the Goldfish card – and then only made the minimum repayment each month thereafter, would take 10 years and seven months to repay the balance. And during that time would pay £322 in interest.

Shoppers planning to use their plastic over the Christmas period – and particularly those who are likely to make just the minimum repayment each month – should consider taking out one of the 43 zero per cent on purchases cards available. Those who have an existing balance currently – or who are likely to be left with a balance in the New Year – should look to transfer this balance to one of the 56 zero per cent balance transfer cards available.

Robert Kenley, head of credit cards at moneysupermarket.com, said: “To avoid a ten year Christmas financial hangover, Brits should make some fiscal New Year’s resolutions. Firstly, they should try to transfer existing debt to a zero per cent balance transfer card, and secondly ensure they pay off this Christmas’ spending before they start on next year's. The key benefit of a zero per cent deal is that all of the monthly repayment goes towards clearing the outstanding balance and therefore the debt can be cleared much quicker.

“If the average spender switches their Christmas balance of £360 to the GE Transformation Card which currently offers zero per cent on balance transfers for 12 months and pays off £33.55 each month, they would clear the debt by next Christmas. As an extra bonus they could save themselves £322 in interest payments – enough for a few extra presents under the tree come next year.”