Millions Of Britons Still Paying For Last Xmas

As millions of shoppers gear up to two of the biggest shopping weekends on the calendar, figures showed 2.3 million had still not paid off their credit card bills from a year ago.

One in seven borrowed to fund the cost of last Christmas – the equivalent of 6.9 million people, leaving a third still trying to clear their debts a year later.

It is a massive concern for millions of Britons who have struggled to survive the credit crisis and recession of the past few years, and now face being unable to afford this Christmas.

Experts suggested the fall came amid fears about unemployment and repossessions, which encouraged borrowers to make reducing their debts a priority. Low interest rates on mortgages means many home owners have had the spare cash to pay off credit cards and personal loans.

However Integrity Debt Solutions has seen the number of people struggling with personal debts like credit cards increase significantly in the last 3 months.

They also advise that "it's worrying that so many are still repaying the cost of last Christmas. At this time of year the temptation to spend is huge but it's really important not to get carried away and spend more than you can afford – it will only come back to haunt you later".

55 per cent will be using credit cards and 3 per cent will take out a personal loan to pay for this Christmas. One in four adults said they will use savings.Those aged 25 to 34 are the most likely to run up debts on Christmas spending with 24 per cent admitting to going into the red.

There are 30 million credit cardholders, each using on average 28 per cent of the typical credit limit of £7,000, according to research.

Leaving an outstanding balance on a credit card and only repaying the minimum amount each month is often seen as a dangerous trap because the high levels of interest charged on many card balances means the total amount consumers pay back can increase significantly.

It would take someone 17 years to repay a debt of £1,000 borrowed at 18.13 per cent if they paid back just the monthly minimum repayment.

The average time taken to clear Christmas debts is just over five months, with 21.6 per cent of borrowers paying it off within a month-and-a-half, according to the latest research.

Debt Advisors at Integrity Debt Solutions commented "Christmas is only one day of the year out of 365, because of the hype and the need to provide for families, friends and loved ones, more and more people over spend on credit cards and loans during this time. The result of this means more people facing bigger debts with more pressure from creditors wanting payment. The increase in people using credit and getting into debt this way is on a sharp increase, and we predict that this will have a dramatic effect on the levels of personal insolvency in 2011".


(Author: Darren Perks)