The Pitfalls of Putting Christmas on Credit
Christmas can be very expensive – but it doesn’t have to be. It’s worth asking yourself if your family would want you to borrow over this period.
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Let’s face it, Christmas is an expensive time of year. Often described as ‘the season of goodwill’, we are actively encouraged to be generous with our time and money. It’s also fair to say there’s almost a stigma surrounding those who do not splash out for Christmas and – as a result – the pressure to make everything ‘perfect’ can sometimes be overwhelming.
Despite Christmas being the same date each year, many still find themselves struggling to budget throughout the year to cover the costs, therefore turning to finance options.
This can be a wonderful time of year but it shouldn’t be detrimental to your finances. Instead, there might be a way to enjoy the festive season without breaking the bank.
How Christmas is driving us into credit card debt
If you’re struggling to afford Christmas, it can feel like you’re the only person in this situation. However, a recent survey from StepChange demonstrates how that simply isn’t true.
According to the organisation, almost 70% of people are unable to comfortably afford Christmas. As a result, around 30% reported they’d be borrowing funds specifically for the occasion. On average, these sums won’t be repaid until around September.
Whether cutting costs or borrowing money, this research demonstrates what we’re prepared to do so we can make Christmas wonderful. However, are these statistics really surprising?
It has also been reported by the Bank of England that a typical UK household spends over £800 more in the month of December, compared to the other months of the year.
Just about everybody understands the importance we place on making this period special – this is especially true if you have kids. However, as this period should ideally be celebrated without incurring debt, it might be time to rethink what Christmas means.
Why Christmas loans are not the answer
There are numerous companies which will advertise Christmas loans for bad credit or short-term financing to cover the festive period, this is not the answer. After all, Christmas is about family – and how would they feel if you were getting into debt because of the need to please them?
Instead, it’s time to assess what Christmas means for you – is it truly about lavish gifts and food? Or is it about just relaxing with your family for the day?
Let’s talk about debt
If you’re borrowing money to cover Christmas – and it’s going to take you months to repay what you owe – then it’s worth taking some time to think whether your loved ones would want you accumulating debts this season.
Chances are, they would prefer you started the new year in a healthy financial state – instead of a generous present. Alternatively, if you’re already struggling with Christmas debt then it might be worth giving yourself perhaps the best gift of all – and making these debts a thing of the past through consolidation.
A debt consolidation loan is not money to cover the cost of Christmas – it is financing to pay off your creditors and leave you in a better financial state. To find out more information, and identify whether we can help you, get in touch today.
With Christmas rapidly approaching, we hope you enjoy the period – without worrying about the financial pressures.
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APRs from 5.8% to 89.9%
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Unsecured Loan Representative 69.9% APR
Borrowing £7,500 over 36 months, repaying £502 per month, total repayable £18,083. Total cost of credit £10,583. Interest rate 69.9% (variable). The lenders on our panel offer loans for 12-60 months, with rates from 5.8% APR to 89.9% APR. The Representative Example is based on all loans paid out by lenders between 19th Apr 2022 and 23rd Dec 2022.
Secured Representative 11.7% APR
If you choose to add fees to the loan: Assumed borrowing of £25,000 over 120 months, plus a broker fee of £2,500 and a lender fee of £250 would result in monthly repayments of £345.55, the borrowing rate is 8.6% (variable), the APRC is 11.7% (variable), total charge for credit £16,466.00 and the total amount payable £41,466.00. You can opt to pay the lender and/or broker fees upfront, your adviser will discuss these options with you.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any debt secured on it. All rates vary subject to loan amount, loan type and status. Repaying your debt over a longer period of time may increase the amount you pay.
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