According to the latest research* from Equifax, the leading instant online credit information provider, 3 in 10 consumers are planning to borrow money to fund the coming festive season.
As Neil Munroe, External Affairs Director, Equifax explains, there’s nothing wrong with that plan. “But it’s really important that consumers budget so that they can afford to pay off their debts as soon as possible in the New Year. Otherwise they could find Christmas 2012 hanging over them well into 2013 – and costing them a lot more than originally planned.
“Clearly the current economic climate is making balancing finances quite difficult for some families, and it’s understandable that they might want to put financial pressures at the back of their minds so that they can celebrate Christmas. But, with our research revealing that it took between 2 and 6 months for a quarter of consumers to pay off Christmas 2011 debts, it’s a concern that consumers already under financial pressure could be paying extra interest in 2013. And that’s especially the case considering that 1 in 10 consumers said they don’t budget for Christmas spending.”
The fragile state of UK consumer finances is also highlighted by the Equifax research, which found that nearly 65% of consumers have seen an increase in their monthly out-goings in 2012 and three quarters say they now have less disposable income than this time last year. “This could be another reason for any debt incurred for Christmas 2012 having an impact on finances well into 2013”, continued Neil Munroe. “Especially as nearly half of respondents to our survey said that they plan to spend the same or more than last year.”
When it comes to how much consumers plan to spend on their Christmas celebrations, just over 13% will be spending more than £500 although the same percentage plan to spend between just £100 and £150.
The research also provides a revealing insight into some of the steps that consumers are planning to take this year to save on the cost of the festivities, with over 13% planning to downsize on the turkey and 17% aiming to re-use unwanted presents. The enormous popularity of discount vouchers and retailer reward points also appear to be playing an important role in funding Christmas 2012 with half of respondents citing both of these as helping with festive finances.
How will you save on Christmas costs?
Use discount vouchers 51.57% Cashing in retailer reward points 49.38% Set smaller budgets for presents for family and friends 33.50% Buy presents in the sales throughout the year 26.68% Only have my Christmas lights on at night 21.53% Stop buying presents to family/friends’ children who are over 18 19.91% Have Christmas dinner at home rather than eating out 19.46% Reuse unwanted presents 17.39% Give homemade presents 14.21% Down-size my turkey 13.53% Buy from Charity Shops 13.53% Secret Santa – so only buy one gift per family group or friends 7.94% Send e cards rather than use the post 7.27% Not invite as many extended family for dinner 5.48% Wait to see friends and family until after Christmas so you can buy their presents in the sales 2.40%
“Consumers can stay on top of their finances by getting a copy of their credit report which provides a valuable insight into their financial status and current credit agreements as well as enabling them to assess their ability to gain new credit”, concluded Neil Munroe.