1.4 Million Brits to Fund Christmas Through Payday Loans
November 21, 2014
Christmas looks set to bring more debt misery to consumers and families around the UK this year, with millions intending to fund their festive spending through credit.
According to research by the Money Advice Service (MAS), around 46 per cent of men and women around the country will be funding Christmas through credit, with as many as 1.4 million set to rely on payday loans to free up cash in the coming weeks.
The figures compiled by MAS also suggest that British adults will spend roughly £2 billion more this Christmas than they did collectively over the 2013 festive period. Worryingly, the number of people likely to turn to payday loans to fund their Christmas spending has also increased, up 200,000 from the 1.2 million recorded last year.
Another notable finding unearthed by the MAS research was that large amounts of money being spent over Christmas are essentially wasted, with very considerable quantities of food and drink being bought but never consumed. In fact, the figures suggest that an eye-watering £2.4 billion was spent on food and drink that was eventually thrown out over the course of last Christmas. This equates to an average of £28 being spent on wasted goods by each adult in the UK.
MAS’ study also found that 37 per cent of people in Britain received gifts they have never used over Christmas 2013, with the average value of those presents being around £54.
A sense of responsibility for ensuring that their families had a great Christmas was found to have been at least partly responsible for encouraging excessive and unaffordable spending last year. According to the numbers, 37 per cent of British adults feel under pressure to deliver a special day at Christmas, while over a quarter admit that they generally spend more than they can really afford over the festive period.
A key reason why Christmas ends up providing such financial headaches for UK consumers and families is believed to be that so many fail to plan ahead and map out their intended spending in advance. However, according to MAS, as many as one in 10 Britons adopt a financial planning strategy that amounts to a policy of ‘spend now, worry later’.
“Christmas is such a special time of the year for most of us, but a big debt hangover is the last thing anyone wants. Planning ahead by looking carefully at costs will help consumers to take control of their spending and alleviate some of the pressure,” remarked Jane Symonds from the Money Advice Service.
Symonds also noted that payday loan providers in the UK should soon find their industry more tightly regulated, with a cap on interest rates to be introduced early in the New Year.
Statements released by MAS along with its latest research findings said: “Payday loans are advertised as quick access to cash, but can cost a lot more than you bargained for if you don’t repay in full, and on time. Always explore all the alternatives before considering this option. For example, can you extend your overdraft, apply for a credit card or join a local credit union.”