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The horrible cost of Christmas credit - and how to avoid it

Sarah Coles | 6 December 2017 | A A A

You’re about to read press releases, which we’ve written for media use only. They’re not intended for individual investors. They’re not personal advice and don’t include any recommendations.

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You’re about to read press releases, which we’ve written for media use only. They’re not intended for individual investors. They’re not personal advice and don’t include any recommendations.

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  • Figures out today from National Debtline reveal that 37% of people are putting Christmas costs on credit this year – up from 33% last year.
  • With the average cost of Christmas at £1,551*, borrowing on a credit card for a year could cost £200 in interest, and going into your overdraft for the year could cost £960 in charges.
  • A regular saving strategy could save you as much as £987 a year.

The full National Debtline release is available here.

Sarah Coles, Personal Finance Analyst, Hargreaves Lansdown:

"People are feeling the pressure this Christmas, as inflation continues to roar ahead of wage growth, and everything from mortgage costs to everyday bills are creeping up. Nobody wants to cancel Christmas, so it’s hardly surprising that so many people turn to credit. The trouble is that the cost of this borrowing really adds up – putting the household budget under even more pressure next year."

"The average total cost of Christmas is £1,551*. If you were to put it on the average credit card** and repay it over 12 months, you would have to pay £146 a month – and would end up spending an additional £200 in interest. If you were to build up an unarranged overdraft and pay it off during the year, it would cost you £960 in charges***, and you would have to pay £209 a month."

"Compare that to saving in advance all year through a regular saving account, earning 3.5%****: you would pay £127 a month and earn £27 in interest over the year. In total, it’s £227 cheaper than paying for Christmas on a credit card and £987 cheaper than using an unarranged overdraft. Of course that still leaves you with the challenge of paying for this year’s Christmas, but there are strategies that can cut the cost dramatically."

Cost cutting strategies

  1. Talk to your family, and agree not to buy presents for some people. The easiest approach is just to buy for the children.
  2. Do a Secret Santa with the friends you usually buy for - so you only need to buy one gift each
  3. Arrange to see people after Christmas and exchange gifts then – which you can buy in the sales with your December paycheque.
  4. If you’re on an incredibly tight budget, when you see people after Christmas, you could even use the opportunity to re-gift anything you received on the day.
  5. Get creative. If you are crafty you can save a fortune. Even if you’re desperately uncreative there are clever solutions. You can, for example, use a large jam jar and add the ingredients for biscuits in layers. Add a heartwarming label and an old piece of ribbon, and you’ve produced a thoughtful, homemade gift for less than £1.

*According to American Express

** 23% according to Moneyfacts as at 25 October.

***Assuming you bank with Bank of Scotland, which charges £8 a day for a maximum of 9 days a month, plus a maximum of one £8 unpaid transaction fee

**** Available from Saffron Walden Building Society (the highest rate that’s available to everyone – although Nationwide Current Account customers can get 5%). The account is fixed for 12 months, so would pay out just before Christmas in 2018.


You’re about to read press releases, which we’ve written for media use only. They’re not intended for individual investors. They’re not personal advice and don’t include any recommendations.