Credit cards at Christmas - plan ahead

By Matthew Plant – Financial specialist

This Christmas, a lot of us will turn to our credit cards to make sure we have the funds we need for the celebrations we want. But what will that mean for our finances in the New Year and beyond? The Telegraph looks back to previous Christmases.

Last year, nearly seven million people borrowed money for Christmas, says mystery shopping group Consumer Intelligence. Today, with just over a month to go, around 2.3 million of them are still trying to clear their credit card debt from Christmas 2009.

Nonetheless, it`s an improvement on previous years. Two years ago, apparently, 4.5 million people still had credit card debts from the previous Christmas as they started the run-up to the next one.

In fact, recent figures reveal that credit card holders `are now repaying more of their outstanding credit card balances than ever before, currently 99.5 per cent`.

This year, Consumer Intelligence tells us, 55% of shoppers are planning to use their credit cards at Christmas, while 3% say they`ll take out a personal loan. Around 25% will use their savings.

The UK Cards Association calculates that Britain`s 30 million credit card holders are using an average 28% of the typical credit limit (£7,000). On average, we take a little over five months to clear our Christmas debts.

"Christmas can be a very expensive time of year, and many of us turn to our credit cards as a result," said a spokesperson for Think Money.

"The important thing is to plan ahead - to think about how we`ll repay the money and to make sure we don`t borrow more than we can repay in a reasonable time, before the debt accrues more interest than we can comfortably afford."

Tags: credit cards, Christmas, plan, plan ahead, credit card debt, Christmas debt

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