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Consolidation – the route out of Christmas debt

Consolidation – the route out of Christmas debt

Category: Loans

Updated: 07/01/2015
First Published: 07/01/2015

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

As the reality of January sinks in, many people could be looking for ways to cut their Christmas debt down to size. It's all-too easy to overspend during the festive period, but all is not lost – consolidation could be the answer!

The realisation

Whether it's from treating your loved ones to a few too many gifts, having more Christmas nights out than strictly necessary, or simply splurging in the sales, your bank balance – and probably your credit card statement – could be feeling the effects.

In fact, research from AA Financial Services shows that Christmas shoppers spent an average of £503.15 over the festive period, with 9% admitting to spending more than £1,000. Spare cash in the bank account was the most popular way to pay for all that festive indulgence (67%), but shoppers also commonly paid for Christmas expenses with credit cards – something that more than half (51%) admitted to doing.

This means a large number of shoppers could have spent far more than they were intending, as although turning to credit can be a great way to help cover the cost, it can also make it easier to get carried away. As you're not handing over cash or seeing your bank balance dwindle you can often forget that you're actually spending money, but those few extra purchases could take their toll in the long term.

Take action!

If your credit card is bursting at the seams, it's time to do something about it. You don't want interest on your purchases to add to your woes, so why not transfer the amount to a 0% balance transfer credit card? Doing so could be a great way to clear the balance without accruing additional debt, and as long as you stick to your guns and pay the full amount off, you could spread the cost and still end up free from debt.

Alternatively, if you've got a significant amount of debt holding you back, you may want to consolidate the lot with a personal loan. These don't have the same 0% benefits as a balance transfer credit card, but the bonus is that there's a clear end date – your monthly repayments are set in stone (unlike with a balance transfer card where you may be tempted to only make the minimum repayment each month), and by the end of the term, you'll be completely debt-free.

They're suitable for a larger amount of debt, too, making them ideal if you've got several credit cards that you're committed to getting rid of. You could use the cash from a personal loan to pay off the balance of each card, and will be left with a single monthly payment with no bills to worry about. Provided you then cut up the cards so you're not tempted to spend on them again, this could provide a clear route out of debt.

What next?

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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.