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Warning as Britons put Christmas on credit

A third of Britons are borrowing money to pay for presents this Christmas, while one in five are taking on credit to pay for food, according to new research by the Money Advice Trust.  The debt advice charity, which runs National Debtline, is launching a new 12-day campaign today to help prevent households suffering a Christmas debt hangover in January as they struggle to pay off festive debts.

A poll of more than 2,000 British adults conducted for the Money Advice Trust by YouGov found a significant proportion relying on credit to get through the Christmas season, with some missing payments on household bills to cope financially.  At the same time, relatively few people are taking the pro-active steps required to manage Christmas finances.

Presents on plastic
More than a third of Britons surveyed (34 percent) have already borrowed, or plan to borrow, money to cover the cost of Christmas presents this year – a figure equating to an estimated 16.9 million people.  Of these, more than three quarters (76 percent) are borrowing on credit cards (12.8 million people), with others borrowing from bank overdrafts (2.9 million), catalogue credit (2.6 million) and store cards (1.9 million)*.

Festive food costs
More than one in five (21 percent) have already borrowed, or plan to borrow, to put food on the Christmas table – equating to an estimated 10.4 million people.  Of these, more than three quarters (78 percent) are borrowing on credit cards (8.1 million people), with bank overdrafts (1.6 million) and store cards (712,000) also being used*.

Missed payments
A smaller group is at risk of falling behind with household bills in the short term as a direct result of Christmas costs.  One in 20 Britons – equating to an estimated 2.3 million people – have already missed, or expect to miss, a payment on everyday household bills in order to fund Christmas spending.  Worryingly, this includes people falling behind with ‘priority debts’ including rent, council tax and energy bills.

Amid this high level of Christmas borrowing, which comes on top of new Bank of England figures showing a significant boom in consumer credit lending more generally, the Money Advice Trust is expecting an increase in the need for free debt advice in January.  Last Christmas, the number of calls to National Debtline jumped 80 percent between December and January, while the number of visitors seeking advice via the National Debtline website jumped by two thirds.

To help mitigate households’ New Year debt problems in 2015, the charity is today launching a new campaign – 12 Days of Debt Action – to provide simple, practical steps that households can take to reduce the risk of unmanageable debt as a result of Christmas costs.

The charity’s research shows that the need for this kind of preventative advice is significant, with only one in four Britons (25 percent) having set a budget for Christmas expenditure, and fewer than one in five (18 percent) keeping track of their spending.  22 percent of Britons reported that they had not taken any steps at all to manage their Christmas finances.

Joanna Elson OBE, chief executive of the Money Advice Trust, the charity that runs National Debtline, said: “Millions of Britons are putting Christmas on credit, and while many will be able to pay this extra borrowing off, we know that a large number will fall into debt problems in the New Year.  The welcome economic recovery is creating more confidence – but it is crucial that households do not overreach, particularly as rises in interest rates are on the horizon. 

“If you are worried about your finances, there is still time to avoid falling into difficulty.  Our new ‘12 days of debt action’ campaign aims to raise awareness of simple, practical steps you can take now to reduce this risk this Christmas – from setting a festive budget to spreading the cost of purchases safely.

“Anyone who finds that Christmas does tip their finances over the edge should know that free advice and support is available from National Debtline.  We have to make sure that New Year debt problems are not made worse by commercial debt management companies whose high fees and charges can make bad problems worse.”

National Debtline offers free, independent and confidential advice 24 hours a day online at www.nationaldebtline.org and on 0808 808 4000, Monday to Friday 9am to 9pm, Saturday 9.30am to 1pm (National Debtline phone lines will be open until 1pm on Christmas eve, and will then re-open at 9am on 2nd January).
 
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