CHESTER, England, November 29, 2011 /PRNewswire/ --
- Average amount Brits say they will spend this festive season is GBP 437
- Failing to plan ahead to pay off Christmas debts could cost an extra GBP 70.20 in interest by next Christmas
- Credit card users making only the minimum repayments could take 12 years and 8 months to repay Christmas debt
Brits could be left out in the cold this New Year struggling to pay off their Christmas debts, according to analysis from Britain's number one comparison site.
Recent research from MoneySupermarket found the average amount people think they will spend over Christmas is GBP 437*. In addition, one in four said they will budget for the festivities but expect go over it. Separately, a recent web poll from MoneySupermarket found that over one in ten (11 per cent) will put their Christmas spending on their credit card or store card.
With the average festive spend expected to be GBP 437 MoneySupermarket found that with the average standard credit card APR of 18.44 per cent, the festive spree could cost an extra GBP 70.20 in interest by the time Christmas 2012 comes around. Furthermore, MoneySupermarket calculated someone with a balance of GBP 437 making only the minimum repayment of 2.5 per cent each month would take 12 years and 8 months to clear their debt, and would fork out an extra GBP 409.25 in interest payments in the process.
Kevin Mountford, head of banking at MoneySupermarket.comcommented: "Christmas and New Year is an expensive time for all, and there's no doubt people will put their hands in their pockets to pay for more than they can realistically afford. Consumers really need to try and keep a sensible head under their Santa hat, as once the decorations are down all they will be left with is a financial hangover.
"In order to start 2012 in the right way, anyone using a credit or store card to fund the festivities should think ahead on how they plan to pay off the debt. It's important festive spenders use the most appropriate card option to suit their needs; using the wrong credit card could end up costing far more than they bargained for.
"A credit card offering zero per cent interest on purchases might be the cheapest option for cash strapped shoppers as long as they pay off the balance in full before the promotional period ends. A card such as the Halifax All In One Credit Card offers a market leading 0 per cent on purchases for up to 15 months, but also has the benefit of 0 per cent balance transfers, meaning consumers can spread the cost of shopping and consolidate their debts.
"For those consumers able to pay off their balance in full each every month, a cash back or rewards card could be a good option as it offers rewards each time they spend. For example the Amex Platinum Cashback Credit Card offers up to 2.5 per cent cash back for the first three month up to a maximum of GBP 100 followed by an ongoing cash back rate of 1.25 per cent. In addition, the card offers 2.5 per cent cash back on the anniversary of being opened so you can boost your rewards in 12 months time.
"Setting up a direct debit for credit card repayments is essential as consumers should avoid missing payments at all costs, otherwise they will lose their promotional offer. The decision to use a credit card or store card shouldn't be taken lightly and careful budgeting is essential to ensure people can pay off their Christmas debt quickly, and within the next twelve months - or as our findings show, they could be left paying for Christmas 2011 for many years to come."
Notes to editors:
* This figure is based on MoneySupermarket.com research that found Brits this year will spend GBP 437 in total on their Christmas presents
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Kevin Mountford
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SOURCE moneysupermarket.com
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