New data from StepChnage has revealed the effect of Christmas on people’s finances, with nearly seven in 10 (68%) unable to comfortably afford this festive season and nearly a third turning to credit to help fund Christmas shopping.
The survey asked 1,533 people who use social media and will be celebrating Christmas this year about the pressures they feel to spend money and use credit over the festive period.
The research revealed nearly a third (31%) of consumers celebrating Christmas will borrow to pay for it, with a quarter (25%) intending to use a ‘buy now, pay later’ scheme. This rises to a third (36%) among 16-34-year-olds, a demographic more likely to have insecure or irregular income, which can put them at greater risk of problem debt.
According to the survey, those who intend on using credit for Christmas say they will take an average of seven and a half months to pay back debts after the Christmas period, meaning their payments won’t be settled until late summer 2020. Of the 31% of consumers who will accrue debt this Christmas, over half (59%) will do so buying presents for friends and family, while nearly a third (31%) will use it to buy food throughout the Christmas period.
A third (34%) of those surveyed said they will have to cut their spending this year to afford Christmas, and 17% stated they would struggle to make ends meet. People will be cutting back on things such as takeaways (32%), nights out (26%) and even on their household food shopping (16%).
Christmas is often considered to be the most magical time of year for people who celebrate and especially for those with children, but this year it is likely to be a source of financial pressure for families. Parents with dependent children who aren’t living at home are most likely to expect to use credit over Christmas (51%). Those with adult children not living at home are the least likely (25%).
The new data coincides with the launch of StepChange’s campaign, ‘The Real Cost of Christmas’, which seeks to raise awareness of the potential long term impact of credit taken out during the festive season. StepChange is planning to share helpful advice and tips to help people avoid or address problem debt this Christmas.
Richard Lane, Director of External Affairs at StepChange Debt Charity, said “Celebrating the festive season is fun but getting into debt for it isn’t. Retailers and credit providers must not encourage over-borrowing at the expense of people’s long-term financial health.”
“If it’s going to take many months to repay what you borrow to pay for Christmas, it’s worth pausing for a moment to think about whether your friends and family would really want you to suffer financially as a result of your generosity. Most people would much prefer their loved ones to have a financially happy new year than a swanky present.”