Nearly nine out of ten people with credit card debt (85%) will suffer a financial hangover in 2017 – after consumers put almost £11 billion on plastic to fund Christmas
Brits are carrying an average of £636 in credit card debt going into the new year
Over half (52%) think they will still be paying it off when the tree goes up again in December 2017
Two thirds (65%) are concerned about their level of debt and one in six (17%) are extremely worried
Nearly nine out of ten Brits (85%) will kick off 2017 leaning on their credit cards, each facing an average debt of £636. That’s according to new research from Uswitch.com, the price comparison and switching service.
With credit card debt hitting record highs last month, the spending of Christmas past will haunt consumers well into the new year. Over half (52%) expect to be paying off this year’s festive debt until Christmas 2017 and, worryingly, almost eight million Brits (15%) are still shouldering the debt of last year’s Christmas bill. The boom in cheap credit has created a vicious circle, with one in ten consumers (9%) saying they cannot ever imagine their lives being debt free.
The festive season drove a fifth (19%) of consumers to spend beyond their means with one in six (16%) going into debt in order to afford Christmas presents for family and friends. When asked why they were willing to take on more debt, one in four (25%) put it down to the magic of Christmas, saying it is too important an occasion for their family to not over spend.
The research shows the financial burden is taking its toll, with two thirds (65%) of consumers concerned about their level of debt as we enter 2017 and one in six (17%) feeling extremely worried about their overall level of indebtedness. Uswitch is urging consumers to act now to lessen the burden and obtain some breathing space – such as by moving existing debt to a credit card that charges 0% interest on balance transfers.
Tashema Jackson, money expert at Uswitch.com, says: “Right now millions of Brits are suffering from festive financial hangovers. While it may be hard to see an end in sight, the worst thing people in debt can do right now is stick their head in the sand.
“As well as reigning in spending, using the right products is an easy way to keep your bills down. For example, savvy shoppers who clear their credit card balance in full each month should consider cashback cards to help make back that little bit extra. For those with longer-term debt, cards offering 0% interest on balance transfers could provide some welcome relief, and a little longer to get on top of their debt – with interest-free periods over 40 months now available.
“As well as choosing the right credit card, shopping around for the best deals on things like energy, broadband, insurance and mobile phone tariffs could help cut your spending in the new year and save you over £1,000.
“If you feel like your credit card woes are out of control, help is at hand. Charities like StepChange offer free and impartial advice to help get your debt under control.”
Find out how you could save over £1,000 a year with Uswitch here.
Research carried out online with the Uswitch.com Consumer Opinion Panel between 01.11.16 and 18.11.16 amongst a sample of 1,261 GB adults.
When asked ‘How long do you think it will take you to pay all your debt off in full?’ 85.4% of those with debt on their card already and/or debt from Christmas answered with a value over two months. 52.1% answered with “over 12 months”. 20.2% answered with “more than 3 years”. 8.8% say they “can’t ever imagine being debt free”.
When asked ‘How will you pay for your Christmas festivities this year?’ 29% said they would use (at least one) credit card. 29% of 50,371,000 (ONS UK adult population) = 14,607,590 people. When asked approximately how much do you think you’ll spend on Christmas this year? (Take into consideration presents, food, drinks, decorations, socializing etc.) The average amount was £750.39. 14,607,590 x 750.39 = £10,961,389,460.
Of those who have credit card debt, when asked ‘How much debt do you currently have on your different types of credit card(s)?’ and ‘Thinking of all of your Christmas spending, how much of this do you think you will put on the following types of credit card?’ the average amount was £635.99.
When asked ‘Which of the following statements best describe how you feel in general about your level of debt?’ Not at all worried = 33.1%, slightly worried = 47.9%, extremely worried = 16.8% don’t know = 2.2%. 47.9%+16.8%= 64.7%.
The Bank of England Money and Credit statistics (PDF) for October (released today) showed the highest level of consumer credit since December 2008, with the highest annualised increase since October 2005. The statistics also showed once again the highest ever level of credit card debt, with the highest annualised increase since February 2006. http://www.bankofengland.co.uk/statistics/documents/mc/2016/sep/moneyandcredit.pdf
When asked ‘Is there any debt on your card from last Christmas?’ 15.4% answered ‘yes’. 15.4% of 50,371,000 (ONS UK adult population) = 7,757,134 people.
When asked “do you think you will spend beyond your means this Christmas?” 18.8% answered “Yes
When asked “will you borrow money so you can afford Christmas?”, 7.6% answered “I borrow money to pay for Christmas every year”, “22.6% answered “I have borrowed money to pay for Christmas in the past”, 8.6% answered “I have never borrowed money to pay for Christmas before, but I may have to do so this year”. 7.6%+8.6%=16.2%
When asked “why will you spend beyond your means this Christmas?”, 9.1% answered “Because of competition from other family members / friends”, 23.2% answered “I feel obliged to do so”, 17.7% answered “Because it’s what is expected”, 31.8% answered “Because Christmas only comes around once a year”, 24.5% answered “Because Christmas is very important in our household”, 35.9% answered “Because I enjoy spending money on Christmas”, 30% answered “Because Christmas is more expensive this year”.
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