Pre-VAT spree to increase debt problems?

Many Britons could be set too increase their debt problems by undertaking a spending spree in a bid to beat the VAT rise in the new year.

On Januar…

Many Britons could be set too increase their debt problems by undertaking a spending spree in a bid to beat the VAT rise in the new year.

On January 4th the rate will jump from 17.5 per cent to 20 per cent, which according to research from Santander Insurance will prompt 13.75 million to spend £8.9 billion between them ahead of the change.

The average amount spent will be £650 and the most popular category of item will be electrical goods, including televisions, iPads, iPods and mobile phones, which 42 per cent will go for.

Other popular spending choices will include adult clothing, alcohol, white goods and furniture, with those sin the south-east spending the most in total at £840 on average.

However, such spending may be difficult for some to afford and could lead to credit card debt problems for many, should their decision to beat the rise end up adding more to their monthly repayments than can easily be repaid.

This may particularly be the case as the sprees will coincide with Christmas spending on presents and other items as well, with this being a time when many will run up large debts.

Commenting recently on the intentions of some to beat the hike with some spending before the end of the year, founder of personal finance site Moneymagpie.com Jasmine Birtles argued there is a “certain justification” for such an approach.

However, she went on to state it seems “incredible” some are thinking of spending more at Christmas this year than in 2009, considering the economic situation.

By Amy White

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