Christmas Debt, what is the price of Christmas?
Avoiding Christmas debt
Research by The Co-operative Bank in 2013, found that most people in the UK won’t start paying off their Christmas debt until March the following year. It also discovered that around 22% will be still trying to pay off Christmas debt from the year before.
This doesn’t just mean they have to juggle repayments, it can also affect their credit history and the ability to get credit in the future.
But Christmas debt doesn’t have to be inevitable. There are some key steps that we can take to make Christmas a little easier on the bank balance.
All in the planning
Planning and budgeting are key to avoiding debt at Christmas.
Be realistic about what you can afford and set a strict budget. Work out how much you are going to spend on each person and stick to it. It helps to try to manage the expectations of what you or Father Christmas can give. Christmas is a time of giving, but it is all too easy to overspend.
Remember the household bills
Christmas might be on its way, but you still have to buy food, pay the rent, mortgage, utility bills, and any debt repayments. So make sure you work household bills into what money you have for Christmas spending.
Stick to cash, cheque or debit card
Around 30 million people in the UK have at least one credit card. But if you can pay for your goods with either cash, cheque, or debit card, this is a much better alternative than using credit.
If you have to use a credit card, make sure you shop around first and compare the terms. Some cards will charge a high rate of interest but offer interest-free periods. It’s important to budget for these costs and put in the diary when you need to make payments.
Get the best deal
It’s obvious, but try as many different places as possible to find the best price before you buy presents. Spend some time looking around on the internet to find the best deal. It could save you a lot of money.
Read the small print
If you do decide to take out credit to pay for Christmas, then make sure you check for hidden extras in the credit agreement. Work out the total amount payable and make sure that you can afford the monthly instalments. Interest-free credit can be appealing, but if you are late with a payment then you are likely to end up paying a lot more.
If you’ve borrowed money to cover your Christmas spending, remember that very soon you will have to start making repayments. Make sure you pay on time, even if it is only the minimum, or you will be faced with extra charges.
Once Christmas is over, you should start planning for next Christmas. It’s also a good time to start saving. Putting a little away each month will soon add up by December. The New Year sales are also a great opportunity to pick up some bargains for next year’s Christmas presents.
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