How to manage the cost of Christmas

POSTED: 19th December 2013
IN: Personal Guides

The cost of Christmas means that 16 per cent of people will be forced to borrow money to pay for the costs of presents and food, according to price comparison site uSwitch.

undefinedResearch by another price comparison website, has found that 30 per cent of people will not be able to make their November salary last until after Christmas and just 26 per cent of us have budgeted for the festive costs.

Its research found that nine per cent of us will dip into our savings to cover Christmas.

uSwitch also discovered that more than half of us, 52 per cent, will use credit cards to pay for Christmas but there are sensible ways to use credit to pay for the festive expenses.

Kevin Mountford, head of banking at MoneySuperMarket commented: “For many, this year has been a financial struggle, with the cost of living rising at a faster rate than people’s disposable income. As a result, it comes as no surprise that a third of those polled will find it hard to make their November pay last through the Christmas season.

Meanwhile, credit ratings agency Experian found that last year 31 per cent of people used credit cards to pay for Christmas. 20 per cent of people spent more than they budgeted for and as a result six per cent missed their credit card payments and the same percentage paid them late, both incurring avoidable charges.

James Jones, Head of Consumer Affairs with Experian said: “Over the Christmas period many of us will encounter the odd unforeseen expense for which our credit card can be a real lifesaver. But we should not forget that an over-reliance on credit cards, above and beyond what we have budgeted for, can potentially damage your creditworthiness into the New Year.”

Kevin Mountford suggests using a cashback credit card is a good option to earn while you spend, but if you think you will struggle to pay your credit card bill in full then an interest free credit card could be a good option.

Mountford added:  “Opting for one of the competitive balance transfer credit card deals or a low rate personal loan can make sure you are tackling any Christmas debt hangover early.”

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