With Christmas decorations about to be packed away for another year, 2019 is about to begin. For many households around the UK, it will also be a time to face the facts about how much debt they have accumulated to pay for all the fun.
Households will struggle with Christmas debt in January.
Last Christmas research from a leading debt charity revealed that 16% of us, that is nearly 8 million people, would struggle to pay off Christmas.
Nearly a third of people who took out debt to pay for last Christmas took up to seven months to clear what they owed.
More than a third (36%) of people said the festive season last year left them in the red – leaving them with £426 of debt on average, according to Nationwide Building Society.
On average, people said it took two and a half months to clear the debt, although for nearly a third (32%) it took up to July – seven months.
While 85% of people say they set a budget for Christmas, seven in 10 (71%) admit to ignoring it, the survey of more than 2,000 people across the UK found.
Nationwide’s head of customer management, said:
“To help avoid overspending, we recommend making a festive budget and sticking to it as much as possible.
“It’s always worth saving as much as possible ahead to lessen the impact, as well as making the most of deals, vouchers and discounts.”
Many resort to credit cards, overdrafts and other credit to see them through.
On average, we’ll still be paying it off at the end of April. And that’s just the debt we’ve run up for Christmas.
By October 2018, the Bank of England revealed consumer credit was rising by £900m a month, including a rise in credit card borrowing of £400m. That means outstanding credit card debt alone now comes in at £72bn.
Despite recent headlines about increases in average wages, the insolvency trade body R3 believes household cash is so tight that one in five British adults would struggle to pay an unexpected bill of just £20 without help.
A recent poll of more than 2,000 British adults found that over half of those questioned said that they had not saved for Christmas before December arrived. Only 14 percent reported that they had started saving up for the extra costs of Christmas before last summer.
Joanna Elson, chief executive of the Money Advice Trust, said that January is a challenging time for many households, with the impact of festive spending taking its toll on household budgets.
“With millions expecting to fall behind with their finances in January, we want people to be financially prepared for the year ahead,” she said.
In a separate report released last month, 37 percent of Britons said they were putting Christmas presents on credit. Up from 33 percent the year previously.
The growing reliance by consumers on credit has led to the highest personal debt levels in recent history. 2018 saw the average person owing over £8,000 – not including mortgage repayments.
Debt charities say they lack resources needed to meet the growing demand for good debt advice. We need “More good debt advisors.”
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Getting help with debt problems is ‘vital.’
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