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Tim Leonard

Tim Leonard

Finance Expert
Published: 27/12/2017
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Consumers who have overspent this Christmas have been urged to address their debt hangover as soon as possible.

The lure of festive spending means that many people will be facing a financial headache right now, whether it be in the guise of an overloaded credit card or an unhealthily deep overdraft.

Yet while both forms of borrowing can provide some much-needed flexibility at Christmas, the latest research by reveals that the cost of the convenience of using an overdraft or a credit card can really start to bite in a period of just three months.

As the table below reveals, remaining in an arranged overdraft until the end of March could rack up a charge of £45, while if someone sits in an unarranged overdraft for the next three months, the fees will add up to an eye-watering £270.

Store card spending and charges on credit cards tend to be less onerous, at a potential £18.87 and £12.48 respectively over the course of the next three months, but is still all money that would be better off in your pocket than the lenders.

Charges incurred from different borrowing methods (£300 debt for 15 days)

Charges if debt not cleared for 3 months in total

Low cost alternatives consumers can choose to get back in the black

Arranged overdraft charging £1 per day for 15 days



Low cost overdraft = Post Office Money's Standard Account: authorised overdraft charges of 1.16% pm, 14.9% EAR. Monthly charge of £1.84.

Unarranged overdraft charging £6 per day for 15 days



Money transfer* = Virgin Money Travel Credit Card Mastercard: 0% on money transfers, intro 2.00% fee. Charge of £6.

Store card charging 29.9% pa (2.207% pm)* one full month's interest



Interest-free* = Sainsbury's Bank Dual Offer Credit Card Mastercard: 0% interest balance transfers and purchases for 30 months, 2.74% balance transfer fee. BT fee charge £8.22.

Credit card charging 18.9% pa (1.46% pm)* one full month's interest



Low rate credit card* = Lloyds Bank Online Platinum Low Rate Mastercard: 0.462% pm, 5.7% pa. Monthly charge of £1.39.

*Based on a minimum repayment of £15, assuming no other portion of the balance is cleared and interest-free days on purchases do not apply.

Fortunately, we have also come up with some low-cost alternatives to help borrowers get back in the black.

So, anyone in an arranged overdraft could look to find a bank account with a low-cost overdraft, such as that provided by Post Office Money's Standard Account, which has a monthly charge of just £1.84.

If you are using an unarranged overdraft, the need for action is most urgent, and taking out a money transfer credit card could be the best course of action to quickly lower any borrowing outgoings.

When it comes to store cards and credit cards, finding alternative interest-free or low rate credit cards is likely to be the key.

"It is entirely possible that even a £300 debt could cost dearly, particularly if borrowers are using their unarranged overdraft," said Rachel Springall, Finance Expert at

"Using any free time to peruse the latest interest-free credit cards to spread any costs is a good idea as it can give borrowers some time to repay the debt. However, shoppers should refrain from paying just the minimum amount required on a credit card and instead pay over this by a fixed amount so that they can reduce the debt faster."


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. Links to third parties on this page are paid for by the third party. You can find out more about the individual products by visiting their site. will receive a small payment if you use their services after you click through to their site. All information is subject to change without notice. Please check all terms before making any decisions. This information is intended solely to provide guidance and is not financial advice. Moneyfacts will not be liable for any loss arising from your use or reliance on this information. If you are in any doubt, Moneyfacts recommends you obtain independent financial advice.

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