Research from uSwitch reveals that 17 million consumers are buying their Christmas presents on credit cards and 10 million will use their card to pay for Christmas dinner.
Worryingly 15 million consumers feel they will be forced to borrow money to provide for Christmas this year.
The research comes off the back of a report in The Independent stating that George Osborne’s deficit reduction plans rely on the public borrowing £360 billion through credit cards and overdrafts in the next five years to stimulate growth.
Struggling to provide Christmas sparkle
Nicolas Frankcom, money expert at uSwitch.com, says: “The happiest time of the year is getting more and more stressful as families struggle to provide the Christmas fairytale that they want to give their children.
“The quest for the ‘perfect’ Christmas will drive many families into debt this year. There is no harm in being a little frugal with the Christmas sparkle by cutting back on having a real tree or leaving distant cousins off the shopping list, especially if it will save you a hefty credit card bill in the New Year.
“But there could be little left to trim off spending with 71% are already planning reign in their spending this Christmas, a third are cutting down on presents and a quarter are going without a real Christmas tree to save money.”
Borrow carefully for Christmas
Paying for Christmas on credit needn’t be a cause for concern, Nicolas Frankcom explains:
“Using a credit card for Christmas can work in your favour if you use it carefully. Shoppers can take advantage of a cashback credit card and make a little back with every purchase, as long as you can pay off your full balance each month.
“If that isn’t for you then there are plenty of 0% purchase cards on the market that can help you spread the cost of Christmas well beyond Easter.
“For those still paying off Christmas 2013, balance transfer cards are now offering the longest ever interest free periods, which could provide some welcome relief and help with the financial juggling.”
According to the research 50% of those using a credit card for Christmas spending are missing out on valuable perks from cashback credit cards.
What are the top five cashback cards?
Whilst 0% purchase cards help defer expensive interest on debts, the most rewarding deals for consumers often come with cashback cards. Ranging from 5% cashback on all purchases in the first few months, to one-off deals of up to 15% cashback from major retailers.
If you are going to be paying for your Christmas on a credit card it’s well worth comparing cashback cards to check that you’re getting the most competitive deal, as you could save yourself a substantial sum.
American Express Platinum Cashback Everyday (free) – Introductory rate: 5% for the first 3 months. On-going cashback rate: up to 1.25% (tied according to spend). Cap £100 in the first three months.
American Express Platinum Cashback Credit Card (£25 annual fee) – 5% for the first 3 months and on-going rate of 1.25%. Extras include double cashback (2.5%) for one month every year.
Santander 123 Credit Card (£24 annual fee) – Fee free in first year for 123 current account customers. Cashback rate: 1% in supermarkets, 2% in department stores, 3% on petrol / trains. Max cashback – £9 per month on petrol / trains.
Capital One Classic Extra (free) – 0.5% cashback on all your purchases with no annual fee to pay. Geared towards building your credit rating, with a maximum credit limit of £1,500.
Nationwide Building Society Select Credit Card (free) -For Nationwide customers only. 0% interest on balance transfers for 26 months and 0.5% cashback on pound sterling purchases. Commission free purchases abroad.