Christmas spending ‘could lead to major debt problems in 2012’

Britons could face large-scale debt problems in 2012, particularly if they use plastic to pay for it all.

That is the conclusion of a stu…

Britons could face large-scale debt problems in 2012, particularly if they use plastic to pay for it all.

That is the conclusion of a study by Moneysupermarket.com, which found in a survey that the typical amount Britons will spend on the festive season is £437 each.

Its research has also discovered that around a quarter of people will go over their budget and a tenth will use their cards to pay for their seasonal spending.

The site has calculated that with the average interest rate being 18.4 per cent, £437 of credit card debt could add another £70.20 by next Christmas.

It also noted it would take 12 years and eight months to clear such a balance if it was paid back at the average minimum payment of 2.5 per cent a month.

Commenting on the situation, head of banking at the site Kevin Mountford remarked: "Christmas and New Year is an expensive time for all and there's no doubt people will put their hands in their pockets to pay for more than they can realistically afford."

And he warned those using their credit cards for Christmas spending that they need a good plan in place to pay it off in the new year if the "hangover" is not to be a very painful one.

Earlier this week, president of insolvency industry practitioners' body R3 Frances Coulson warned that the high cost of Christmas could leave some turning to expensive payday loans as well as cards.

Such consumers could be "lumbered with Christmas debt long into next year", she warned.

By James Francis
 

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