Press release:

Never mind 2012 – one in five Brits still paying off Christmas 2011

christmas-presents-money-credit-card
  • Credit hangover: one in five (17%) Brits are still paying off debts from Christmas 2011[1]
  • New Year, old debt: one in five (19%) consumers are starting January with over £5,000 of debt on their credit card[2]
  • Tied down: over half (53%) of consumers will take over a year to pay off their credit card, 15% fear it will take three years and 7% can’t imagine clearing it at all[3]
  • Big spenders: six out of ten Brits (59%) put Christmas on plastic last year[4]
  • Putting £5,000 of debt onto a balance transfer card could save up to £1,685[5].

Cash-strapped Brits are suffering the hangover to end all hangovers: almost one in five consumers (17%) have yet to pay off debts from Christmas 2011[1], according to new research from uSwitch.com, the independent price comparison and switching service. And for many, the idea of a fresh start is a pipedream – one in five borrowers (19%) are starting 2013 with over £5,000 of debt on their credit card[2].

Christmas may be over for another year, but for the six in ten (59%) consumers who bought their presents on plastic in December[4], the debt hangover is likely to linger on. With pay rises unlikely to keep up with hikes in living costs, over half (53%) of consumers expect to take a year or more to pay off their credit card debt, while 15% say that it may take as long as three years to settle their balance. A worrying 7% can’t imagine clearing it at all[3].

Unperturbed by money worries, however, only 29% of consumers cut back on costs this Christmas. Half (48%) spent roughly the same as last year and a further 23% consumers spent more this year than last[6], with one in ten (10%) spending over £1,000[7].

Michael Ossei, personal finance expert at uSwitch.com, says: “It’s easy to get carried away at Christmas and merrily put everything on plastic, but there comes a time when people have to wake up and smell the coffee.

“Credit cards can be a practical and cost-effective way to shop – but only if you can clear your full balance at the end of the month. Most cards offer a 56-day interest free period, but once this is over consumers could be slapped with a hefty fee. Store cards can be even more expensive, charging as much as a stomach-churning 30% interest rate.

“Balance transfer cards can be a good choice for those struggling to clear their debt, offering more breathing space to pay off your balance, without letting the debt spiral out of control. There are some great options out there: Barclaycard currently offers a 36-month balance transfer card with a 4.9% interest rate and no balance transfer fee. And for those who are able to pay back their debt within two years, there are an even greater range of cards to choose from. But because balance transfer deals are so sought after, lenders can be choosy. You are more likely to qualify if you have a squeaky clean credit rating and a minimum household income of £20,000.

“If you do have to resort to a credit card as a means of managing your debt, then it is vital to the find the best card for your financial situation. Have a look at the current deals on the market and try to strike a balance between the interest free period and cost of doing a transfer. The key is finding the cheapest deal that comes with a timeframe you can comfortably work with.”

Card Interest Free Period Fee Saving on £5,000*

Barclays Platinum Visa

24 months

2.10%

£1,685.00

Barclays Platinum Visa

23 months

1.90%

£1,620.42

Halifax Mastercard

23 months

3%

£1,565.42

Natwest Extended Balance Transfer Visa

23 months

3.50%

£1,540.42

HSBC credit card

23 months

3.30%

£1,550.42

*Assuming 17.9% interest is paid for two years on full balance, minus balance transfer fee.

Source: www.uSwitch.com, correct as at 2/1/13.

— ends —

Notes to editors

Research carried out online with the uSwitch.com Consumer Opinion Panel in December 2012 amongst a sample of 1,055 GB adults

  1. When asked ‘Is there still debt on your card from Christmas 2011?’ 17% said ‘Yes’; 79% said ‘No’ and 4% said ‘I don’t know’.
  2. When asked ‘How much debt do you currently have on your credit card?’ 19% said ‘£5000+’.
  3. When asked ‘How long do you think it will take you to pay off your credit card debt in full?’ 14% said ‘One month’; 12% said ‘Three months’; 13% said ‘Six months’; 9% said ‘Nine months’; 16% said ‘One year’; 15% said ‘Two years’; 15% ‘Three years or more’; and 7% said ‘Never – I can’t imagine clearing it at all’.
  4. When asked ‘Do you plan to buy any of your Christmas presents using your credit card?’ 59% said ‘Yes’; and 41% said ‘No’.
  5. See table: £1,685 saving to be made if £5,000 balance is switched from a 17.9% APR credit card (paying interest over two years, minus 2.1% balance transfer fee) to Barclays Platinum Visa.
  6. When asked ‘Will you spend more or less this Christmas than last?’ 23% said ‘More’; 29% said ‘Less’; and 48% said the ‘Same’.
  7. When asked ‘How much approximately do you think you’ll spend on your card this Christmas?’ 10% said ‘£1000 +’.

About us

uSwitch is an online and telephone price comparison and switching service, helping consumers get a better deal on gas, electricity, home phone, broadband, digital television, mobile phones and personal finance products including mortgages, credit cards, current accounts and insurance.

Energy customers have the option to create an account to automatically monitor the market and notify them when they can move to a cheaper tariff - making future comparisons even simpler and faster. In 2016, uSwitch saved UK consumers over £320m on their energy bills alone.

Broadband customers can conduct a speed test to find out how fast their broadband is and to identify the best broadband provider for their postcode.

uSwitch was the first comparison site to achieve the Plain English Campaign’s Internet Crystal Mark, recognising that it has clear language, is accessible and easy to use. The uSwitch mobile app won 'Most Innovative Use of Mobile' and the 'Chairman's Award' at The DRUM Marketing on Mobile Awards 2017. Consumers voted it Most Popular Website (Comparison category) in the Website of the Year Awards 2016.

uSwitch has a UK contact centre which is manned by energy and broadband experts. The ‘Send Us Your Bill’ service allows customers to post their latest energy bills to FREEPOST USWITCH in order to receive a free call back to be guided through the comparison process. Alternatively, consumers can email customerservices@uswitch.com with their postcode and usage details. uSwitch’s address is The Cooperage, 5 Copper Row, London, SE1 2LH.

uSwitch is owned by ZPG Plc (LSE:ZPG), owner of some of the UK’s most trusted home-related digital platforms including Zoopla, uSwitch, PrimeLocation, Hometrack and Property Software Group.