Credit cards Updated:
The countdown to Christmas has well and truly begun, but the question is, are you ready for it? If you haven't been saving religiously for the past few months you may find it difficult to cover the cost with the single paycheque that's remaining, and unfortunately, this means that many people could be turning to credit.
A survey from short-term loan provider Peachy has found that almost two-thirds (64%) of respondents will apply for a credit agreement, such as a loan or credit card, in the run-up to Christmas, with the main reasons being to cover the cost of presents (76%) and food for the all-important Christmas dinner (38%).
The figures went on to reveal that most of those (24%) would apply for a credit agreement of between £751 and £1,000 to cover festive costs, while 20% thought that £501-£750 would be enough to foot the bill. However, some were after even more, with 17% seeking new credit amounting to £1,001-£1,250, while 14% sought an agreement of £1,251-£1,500, and 19% of respondents were planning to apply for credit of £1,500+.
While credit can provide a useful financial buffer when used wisely, it can lead to disaster if you're not so careful with it. This is why it's so worrying that over half of Peachy's respondents (53%) said that they haven't budgeted for their post-Christmas credit repayments, which means they could have a festive hangover that lasts a lot longer than they were expecting.
Kristjan Novitski, CEO of Peachy.co.uk, said that some consumers could struggle to fund Christmas given the current economic climate, and that "credit agreements can be a positive and useful way to make it to the next payday" during the Christmas period. However, he still cautioned against being too risqué with your credit commitments:
"It is important to stress that you must only take out a credit agreement if you know that you can afford the repayments. Make sure that you create a budget to ensure you can repay your credit agreement, and if you cannot, then you should not even be considering it. Instead, look to cut the costs of Christmas, whether it is cheaper food, fewer presents or cutting the time you spend out. Tough, I know, but necessary!"
A credit agreement isn't something that should be entered into lightly, but if you're confident in being able to make the repayments, you may be tempted to consider it. If so, we've come up with a few top tips to help ensure you give the Wise Men a run for their money in the financial organisation stakes:
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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