05 December 2016

Brits planning 'Christmas on credit'

 

  • Almost half (44%) of festive shoppers overspend at Christmas
  • One third (31%) of Brits plan to formally borrow money to meet the costs of Christmas
  • 7% of Brits would sooner get into debt than consider reducing their festive spending

 

 

Almost half (44%) of Brits overspend in pursuit of creating the perfect Christmas for family and friends, according to new research from TSB.

Driven by pressure to appease loved ones, more than half (54%) of Brits don’t even set themselves a budget for their Christmas spending. In some cases this has included forking out on gifts including designer puppies at £500 a pop, ponies and a houseful of new carpets for the in-laws.

Peer pressure is also responsible for loosening purse strings as more than one in 10 (12%) admit that they overspend to ‘keep up with the Jones’s’, even if they can’t afford to.

With one in 10 admitting to living beyond their means at Christmas, it’s unsurprising that many shoppers are planning a ‘Christmas on credit’ this year. In preparation for their splurges, 7% of Brits would sooner get into debt than consider reducing their festive spending and 12% are planning to take a ‘buy now, pay later’ attitude.

Almost a third (31%) of Christmas shoppers will make formal arrangements to borrow money specifically to cover the costs of Christmas. Using a new or existing credit card is the most popular choice with almost a fifth (19%) planning to pick up the plastic, followed by overdraft extensions (5%) and taking out personal loans (3%).

While the majority of spenders expect to have repaid any extra debt they took on to cover the costs of Christmas within one month, 13% think it will take them up to three months, while 1% expect to be paying the price until the following Christmas.

However, Christmas spending isn’t only hurting pockets, it’s also causing some people to feel anxious (36%), under pressure (27%), worried (26%) or guilty (21%). A fifth (19%), on the other hand, feel ‘nothing at all’ when they spend too much.

To help ease the potential burden of Christmas, TSB is partnering with TV psychologist Corinne Sweet, to help shoppers pause and think before stuffing their Christmas stockings with unnecessary gifts, while also knowing the options available to them when it comes to getting in control of their finances and debts. 

Corinne commented: “Psychologically-speaking, the ‘urge to splurge’ is very tempting, especially at this time of year, and when you want to make your loved ones feel you care.  No-one wants to be a ‘scrooge’ but, the financial headache that follows when the bills come in during the New Year, can kill the delight of giving too much.  There is often a pull to go with the latest trend, to keep up with friends and family, or to ‘buy love’ at Christmas.  Sadly, this seldom lasts.  Far better to make an effort to give thoughtfully, not least if you are someone who likes to splash out.  You can end up feeling disappointed (and grumpy) when your generosity is not reciprocated.  Try making a budget, and also being creative and thoughtful about presents.  Spending time with a loved one can be even better than spending money - so be more watchful of your urge to splurge and you may stop yourself having nasty surprises in the New Year.”

Nick Smith, Head of Personal Loans at TSB, says: "For many people, Christmas is a time to be merry and celebrate with loved ones, so it’s unsurprising that many people feel the pressure to make it a success. As we all know, it’s only too easy to get carried away when it comes to Christmas shopping and even the best intended budgets can soon fly out of the window.

“It’s encouraging to see that many of those taking on debt to cover the costs of Christmas do so for just a short period, but it can easily become a burden to pay off – particularly if borrowers don't know their interest rate.

"To see if people could save money, or switch to a better rate, it's crucial they first of all dig out their  credit card or loan statements, find out their interest rate and work out exactly how much they are being charged each month for their borrowing. They should then shop around to see if they could reduce the interest they pay, or use online tools, including TSB's debt consolidation calculator, to see if they could reduce their monthly payments or possibly be debt-free faster by switching their borrowing.

"However, borrowing well doesn't just mean moving debt to a cheaper rate, it also means making sure any future spending is planned for and is affordable. We'd urge people to keep a track of their spending, to make sure any money they have going out, is covered by the money they have coming in.

"Some methods of borrowing, such as credit cards, can cost more than others; particularly if being used for longer periods, so it’s really important for people to compare all the options open to them, and seek free, independent advice on managing their debt from organisations like Citizens Advice or the Money Advice Service."

Corinne Sweet's top five tips for budgeting this Christmas

  1. When you feel the 'urge to splurge' at Christmas, either out shopping or on your PC at night, give yourself a moment to reflect. Go away from the shop or the screen, and take time to think if you really want to spend that much.
  2. Money can't buy you love - better to buy one or two really nice things (that can be changed), than a barrel-load of stuff.  If your partner/ spouse is stuck on what to buy you – give them tips so you are not disappointed.  And you could set a mutually agreed budget to deflate any rows later.
  3. Make a budget – even though this feels it is against the spirit of the season, include in the extras, the Christmas stockings, the food, travel, shows out, and buy your presents, as far as you can, accordingly.
  4. Be thoughtful about who you give presents to – it is possible to give too many or too much, if you are a spender at heart.  You can hand make things or give a gesture and be savvy in your buying – a little goes a long way.
  5. Don’t leave yourself out – give yourself a nice present, and you will feel less ‘empty’ as we often give to others what we want for ourselves.  Within your budget, give yourself a nice jumper or haircut, as part of the Christmas season (even a day at the spa would help relax you).  We often overspend when we feel we need something for ourselves – ironic, but true.

Notes to editors

TSB was built to bring more competition to British banking - to be a real challenger tothe big banks and to deliver the kind of banking the people of Britain want.TSB only serves local customers and local businesses, to help fuel localeconomies, because communities thriving across Britain is a good thing for allof us.

We havea simple, straightforward and transparent banking model and make clear on ourwebsite how we operate and make money. We offer the products and servicespeople tell us they want, with none of the funny stuff people normallyassociate with traditional banks.

Our 4.8million customers, award winning mobile and digital banking, nationwide networkof branches and 8,500 Partners mean we are big enough to make a difference, butsmall enough to be an agile challenger to the entire market.

Forfurther information about TSB Bank plc, please visit our website www.tsb.co.uk.

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