A red Christmas – consumers starting January with £3,000 on their credit card
Consumers will start 2014 with an average of £2,875 on their credit card – but 7% will owe more than £10,000
Over seven million Brits (15%) are still paying off debts from Christmas 2012
44% will take over a year to pay off their credit card, while 16% say it will take three years and 5% can’t imagine clearing it at all
Over half (52%) of people have used a credit card to see them through the festive season, with each spending an average of £418
Consumers could save up to £1,800 by switching their credit card and essential household bills**. **
Consumers will see in the New Year owing an average of £2,875 on their credit card, according to new research from Uswitch.com, the independent price comparison and switching service. But a worrying 7% of consumers will start 2014 with balances of £10,000 or more on their card. And, with over seven million Brits (15%) still paying off debts from Christmas 2012, the prospect of making 2014 the year to become debt-free could be a pipedream for many.
Christmas may be over for another year, but the debt hangover is likely to linger on for the 52% of consumers who bought their presents on plastic this month, each spending an average of £418. With recent warnings from the Bank of England that there are unlikely to be decent pay rises until at least 2015, 44% of consumers expect to take at least a year pay off their credit card debt. 16% say that it may take as long as three years to settle their balance and 5% can’t imagine clearing it at all.
The numbers come despite the cutbacks made by consumers to afford Christmas this year. Over one in three (37%) cut down on presents, a quarter (27%) went without a real Christmas tree and one in ten (9%) cancelled their turkey to save money this year.
Michael Ossei, personal finance expert at Uswitch.com, says: “While some families have done well to rein in their spending this Christmas, January can be a bleak time as people struggle to manage their debt. We are feeling the strain of rising living costs and stagnant salaries. Coupled with long-term debts to cope with, we could be in for a bumpy ride.
“It’s important that people don’t fall for the easy option of short-term credit, as this could lead them further into debt. Balance transfer cards with an interest-free period could be a better solution for those needing some breathing space, but if you go down this route to manage your debt, it is vital to find the best card for your situation.
“Now is the time for a financial makeover and for everyone to take a long hard look at their household budget. There are positive signs that consumers are already cutting back, curtailing spending and trying to clear outstanding debt. But by switching providers and managing expenses in a more efficient way, people should be able to look forward to the next Christmas without being saddled by the debts of Christmas past.”
Uswitch.com calculates that families could save as much as £1,800 a year on household bills and financial services through a simple financial makeover
Save up to £350 on your gas and electricity
Save up to £316 on your credit card
Save up to £604 on your home phone
Save up to £491 on your car insurance
Save up to £77 on your home insurance
FOR MORE INFORMATION
Charlotte Nunes
Phone: 020 7148 4664
Email: charlotte.nunes@uswitch.com
Twitter: @uswitchPR
Notes to editors
1,212 consumers.
When asked ‘How much debt do you currently have on your credit card?’, the mean response was £2,875. 7% said ‘£10,000+’.
When asked ‘Is there any debt still on your card from last Christmas?’ 15% said ‘Yes’; 79% said ‘No’ and 6% said ‘I don’t know’. Applying 15% to 49 million adults (ONS) gives 7.35 million.
When asked ‘How long do you think it will take you to pay off your credit card debt in full?’ 15% said ‘One month’; 11% said ‘Three months’; 12% said ‘Six months’; 6% said ‘Nine months’; 13% said ‘One year’; 23% said ‘Two years’; 16% said ‘Three years or more’; and 5% said ‘Never – I can’t imagine clearing it at all’.
In response to: “Of the total amount you plan to spend this Christmas, how much of this do you think you will put on your credit card?” 48.4% answered ‘none’. Remaining figure is 51.6%. In response to: “Of the total amount you plan to spend, how much do you think you will put on your credit card?” the mean was £418.
According to Uswitch.com, consumers can save £1,838 by switching their credit card and essential household bills.
Source: This is Money - 10th December 2013
In response to: “Will you cut back on the cost of Christmas this year by doing any of the following (tick all that apply)? 8.9% answered ‘I won’t serve turkey will all the trimmings but will do something cheaper instead’, 9.1% answered ‘I will give homemade presents rather than shop bought’, 15.1% answered ‘I won’t send Christmas cards’, 16% answered ‘I’ll cut back on decorations’, 18.4% answered ‘I will cut back in entertaining friends and family’, 26.7% answered ‘I won’t buy a real Christmas tree’, 28.2% answered ‘Cut back on socialising with friends’, 35.1% answered ‘I don’t plan to cut back on costs this year’, 36.9% answered ‘I will cut down on who I give presents to this year’, and 9.8% answered ‘Other’.
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