Consumers ‘set for Christmas financial hangover’

Many Britons will still be dealing with Christmas debt in April as they overstretch themselves during the festive period. 

The lead-up to December 25th is typically acknowledged to be one of the most expensive times of the year, but people still need to exercise a degree of caution to make sure they do not find themselves indebted. 

Research by Gocompare.com has found over a third of consumers (35 per cent) expect it to take them three months and six days to clear the arrears they build up over Christmas. Even more worrying is the fact that three per cent of respondents are still dealing with the financial exertions of 2012.

With only 35 per cent of those questioned describing their money situation as good, it suggests many Britons will be relying on credit cards and other forms of unsecured lending to make ends meet. 

Just over a quarter of borrowers (26 per cent) are confident of being debt free by the end of January, while 14 per cent expect it to take them six months and six per cent think they will be saddled with the arrears throughout 2014.

Using credit responsibly

The study discovered 37 per cent of shoppers are going to use a credit card to at least partially fund their Christmas spree. While this in itself is not an issue, the problem lies in the fact many will fail to clear their balance and therefore incur interest. 

Matt Sanders, Gocompare.com's banking and credit card spokesperson, commented: "It's clear from our research that many people are feeling financially squeezed this Christmas and are worried about the cost of this year's celebrations.  

"Used sensibly, credit cards can be an effective way to manage your money and spread the cost of Christmas. But, with the pressure to deliver the perfect Christmas, it is all too easy to lose track of your spending and for things to get out of control."

With recent research by YouGov – on behalf of Financial Planning Week – finding that 82 per cent of people are worried about their financial situation, it is clear that action is required in order to help those struggling. 

Take control of debt

In order to make sure consumers can stay on top of their financial situation, they should take control. For example, a repayment plan for credit or store cards should be drawn up as soon as a bill arrives, while people should never just make the minimum repayment.

Furthermore, those with more than one card should clear the most expensive one first, rather than spreading the payments evenly. The last thing anyone should do is ignore the problem, as this will only make it worse.

However, if consumers cannot keep their finances in check, seeking out debt management help is the right thing to do. Depending on the severity of a person's situation, they can take out a plan that will structure their repayments and clear debts over a specific period of time. 

By James Francis