Thinking of using the credit card this Christmas? Think again; as reports show sizable chunks of the nation still owe an average of up to £800 in personal debt from last years festive celebrations.
Research from retail finance experts Pay4Later revealed approximately 3.3 million adults are still paying for last Christmas’ present buying, food and other expenses, with a lingering debt of around £780 from Christmas 2013.
The study found that the average family will take up to six months to clear their Christmas debts, with the average adult borrowing somewhere in the region of £654 (£700)
The Trade Union Congress (TUC) has claimed that falling wages and lower household savings are to blame, making it harder for households to clear their credit cards and borrowing loans. For example, a minimum wage earner needs to earn a full-time wage packet for a whole year to pay off their previous Christmas debt.
Scott Law, CEO of Pay4Later said: “Consumer finance is at its highest for a decade and shoppers are increasingly confident about borrowing money.
“But still owing money on debts incurred for last Christmas the following November is potentially worrying and people need to ensure they have an affordable plan of how they are going to fund debts before taking on new credit.
“Retail finance offers with set repayments over an agreed period enable shoppers to plan ahead and fund major purchases in an affordable way.”
Their research found that a scary 660,000 adults still owe more than £1,000 from their 2013 Christmas splurges and 30% of the debt incurred was from major purchases and finance agreements.
Further supporting research published by Consumer Intelligence of an online survey of 1,034 adults aged 18 and above between October 30th and 31st 2014 confirmed Pay4Later’s findings, identifying nearly half of all families who borrowed during last year’s festive season still haven’t finished paying the debt off.
The chart shows a geographical breakdown of the UK’s regions, detailing the percentage of people who are still paying for their previous Christmas.
London is geographically the worst area for goods purchased on credit, as one in eight still owe money for 2013 festive purchases. People from the South West and West Midlands are most likely to have cleared their last year’s debt.
TUC General Secretary Frances O’Grady said: “Britain’s real-wage squeeze is forcing more and more families to put Christmas on credit.
Millions of households will be still be paying for this year’s presents, food and drink well into the summer and beyond.
Instead of benefiting from Britain’s economic recovery ordinary people are finding it harder to pay off their debts.
Unless the government does more to tackle the cost of living crisis this debt bubble will continue to grow. Britain needs a pay rise.”