Interest warning over Christmas spending

Consumers have been advised to be aware how much interest can be piled up on their debt if they have overspent at Christmas.

Rachel Springall, spokeswoman from Moneyfacts.co.uk said: "Customers who spend on credit over the Christmas period need to ensure they are aware of the interest they can incur from their purchases."

She noted there are interest-free deals that last for up to 15 months, which may help those who ensure they use debt consolidation measures to reduce the figure before this period elapses.

Ms Springall also noted many will be tempted to dip into their overdrafts and said there are some accounts that offer buffer zones without interest.

However, the expert added: "Customers need to be aware of interest rates or daily charges, which can soon mount up if you stay in your overdraft for an extended period of time."

Those who do use an overdraft and run up large charges may find they need some form of debt help if they are struggling to pay it off, not least if they have also spent heavily on credit cards.

With most Christmas shopping now done, many people will have already spent heavily and some could have exceeded their budgets, leaving them with a new year financial headache.

One possible piece of evidence suggesting some may go deeper into their overdrafts this year is the larger amount of cash withdrawn from ATMs in December this year compared with 2010.

A study by Sainsbury's Bank has projected that Britons are on course to draw out £11 billion this month, compared with £10.3 billion last year, when severe cold and snow kept many people indoors more.

Posted by Paul Thacker