12th January 2016
One in five admit to overspending at Christmas as Britain comes to terms with its January debt hangover.
New research by Confused.com reveals that one in five (20%) Brits believe they’re in a worse financial position now than they were this time last year.
According to new research from the comparison site, more than one in five (21%) Brits confessed that they had spent more than they intended to in the run up to Christmas.
And for some it appears the aftermath of excessive Christmas spending may be taking its toll, as one in 14 (7%) Brits admit they will struggle with their finances in the New Year due to excessive Christmas spending.
However, it appears that Brits will try to tackle these financial headaches in January, as a surge in the number of credit card balance transfers is expected this Tuesday (12th January). Confused.com has tracked two years of credit card data, and as people look to start the New Year on a sound financial footing, credit card transfer applications are expected to spike between 20.00 and 21.00 on the 12th January.
Despite so many looking to address the aftermath of their Christmas spending in January, this is still not enough to deter some people from falling into the same trap year on year. In fact, more than a quarter of Brits (28%) say they spend more money on their credit cards during December than any other month of the year.
And for some, it may have been the temptation of joining the crowds of frenzied Christmas shoppers who got caught up in the excitement of days like Black Friday and Cyber Monday that caused their excessive Christmas spending. And 2015 was a bumper year, with Brits spending a record £3billion on online Black Friday and Cyber Monday sales and promotions across the UK.
Perhaps fuelled by this record ‘cyber week’ spending, over one in six (17%) Brits admit they spent more on their credit cards this Christmas than they did the previous year. On average, Brits over-spent on their credit cards by an average of £543 during the festive season. Worryingly, more than one in 10 (11%) believed they overspent by more than £1,000.
It’s perhaps easy to see how personal debt can build up, and as a result one in seven (14%) Brits are worried about their credit card debt. In fact, some credit card holders have taken to extreme measures to tackle their mounting arrears including; cutting down on eating out (27%), reducing their leisure activities and holidays ( 23%), limiting their food shopping (13%). Shockingly, even though we are in the throes of winter some have even reduced the amount of heating they use (10%).
Despite many Brits taking desperate actions to reduce their debt, nearly one in 10 (8%) will still take between six months to a year to pay off their Christmas debt which was racked up on the plastic. Worryingly, nearly one in 10 (7%) will take more than a year to pay off their credit cards debts.
However, to try and clear these snowballing debts many people in the New Year are tackling their finances head on. In fact, more than one in five (21%) credit card holders’ New Year’s resolution is to put their finances in order, with 18% wanting to start paying back any debt they owe.
Yet it’s surprising to see the lack of awareness people have around their finances. Many credit card holders (68%) admit to not transferring their credit card balances onto a 0% interest card, even though they could have saved themselves money by not paying interest. Of those who haven’t transferred a credit balance, the reasons cited for not doing so were that they thought it was too complicated (12%),and one in twenty (7%) were not aware of the option or didn’t know how to do it.
A 0% interest balance transfer card could help people save money; particularly if their Christmas debt is proving difficult to shift. There are many credit cards in the market that offer a period of at least 12 months interest-free credit, with some offering up to 37 months. By having a 0% interest free credit card and using it wisely, Brits can spread the cost of Christmas over several months, and pay it back gradually without having to pay any interest on top.
Nerys Lewis head of credit cards says at Confused.com says: “Christmas is undoubtedly a time of generosity and giving, and many people will rely on credit cards to get themselves through the expensive festivities. If used wisely, credit cards could be a great way of spreading the cost of Christmas over a number of months, particularly with a 0 per cent introductory deal that will give people a bit of time to pay off their purchases.
“However, for those who are unaware of such great offers, they should take a look at the rate of interest they are paying on their credit cards, as there are so many great deals out there. By knowing your spending needs you can find a suitable credit card, with the right interest rates and in the long run save you money.”