Millions expected to turn to payday loans to afford Christmas

December 9, 2013

The festive season is in full swing and as consumers begin their Christmas shopping, it’s expected that many will turn to credit in order to afford that perfect gift.

The Money Advice Service’s annual Christmas spending survey revealed that around 16 million people will use credit cards to pay for the cost of Christmas this year, with over 1 million people taking out a payday loan.

According to the figures, one in ten UK adults are still paying for the cost of last year’s festivities, and 38% of adults said they were “worrying” about how they will afford Christmas this year.  Around 17 million UK adults believe that they will start the New Year in post-Christmas debt.

If you find it difficult to avoid getting carried away during the Christmas period, you’re one of many. Around 27% (more than a quarter) of UK adults admitted to spending more than they could afford on Christmas, and 39% said they pushed their finances to the limit.

Christmas is primarily a time to enjoy the company of friends and family. However, over the years, the commercial nature of the holiday has meant it’s easy to feel pressured into spending more than necessary. Inability to budget and pressure to please loved ones, were just two of the top five reasons for overspending at Christmas.

Head of service delivery at the Money Advice Service, Jane Symonds, said; “Getting to grips with the cost [of Christmas] in advance of the big day will help you take control of your spending and alleviate some of the pressure.”

In an interview with the Daily Record, Scottish politician, Fergus Ewing, advised on an alternative way to afford Christmas, if people feel it necessary to turn to credit. He said: “We are very conscious that there is a particular temptation at Christmas to spend more than one can afford and for those who face financial problems the temptation may be to go to payday loan companies.”

He added: “This type of loan can get people into serious financial trouble with interest rates of up to 5,000% and costs spiralling out of control if the loan is not repaid quickly. We want to say there is an alternative – joining a credit union.”

Around 350,000 Scots are members of a credit union (a member-owned, financial co-operative which is controlled by its members). Joining a credit union in the run up to Christmas could offer you access to extra funds without the high interest rates of a payday lender.

If you’re considering any type of credit to cover the cost of Christmas this year, why not speak to our knowledgeable team at Scotland Debt Solutions for more information on how to join a credit union or other suitable debt solutions. Our experts can help you get the best out of your financial situation and enjoy the festive season whilst keeping your spending under control.

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