Its All About Christmas

Today in the UK there are more people than ever looking for advice on repaying their mortgages. Are these the people who borrowed way beyond their financial means?

January and February this year have seen record breaking numbers of people asking for professional debt advice about their mortgages. Recent figures reveal that more and more people are concearned enough to get help with their mortgage arrears so these are people who already have defaults and arrears, let alone the hundreds and possibly thousands of people who are about to default on their mortgage.

There has been a huge 35 per cent jump in mortgage related debt enquiries in the UK, over January and February 2008 compared to 2007. The good news is that people seem to be learning not to continue spending on credit cards as the credit card related issues fell by 9 per cent.

Of 5.7 million issues dealt with in 2007 almost a third of these enquiries were related to debt; a rather worrying trend. As well as mortgages, the ever increasing energy bills and general household bills are huge contributing factors to the 215,000 new debt related enquires taken this January and February.

The combination of huge increases bills like petrol and diesel prices plus rising housing costs has put additional pressure on day to day finances when they are already stretched to the maximum.

The usual Christmas credit card debt enquiries have fallen by 9 per cent in January and Febraury this year compared to last year, however overdraft enquiries are up 7 per cent on the same time period. So it looks like people are just shifting the debts to other forms of credit, it will be interesting to see the number of debt consolidation loans and general unsecured loans taken out and the number applied for in January, February and when we get to the end of March this year. I bet there are lots of people trying to shift debt to unsecured loans, although the credit crunch has lenders tightening their lending criteria, making it more difficult to get accepted for a new loan.

If you are struggling you should tell whoever you owe the debt to as soon as possible if you’re struggling to make repayments.

It’s no secret that through no fault of our own we spend at Christmas, we spend a lot. Expensive Christmas presents such as video game consoles like the Nintendo Wii and high-tech music players like iPods the holiday period can end up being quite pricey on presents alone.

The advice given to cope with the holidays is to save up good and early, but many of us have too many other expenses to pay throughout the year that saving a lump sum for December is just impractical. This leads millions of shoppers to charge Christmas gifts to credit cards, resolving to pay it all off in the New Year. The trouble is that some people end up in the situation where they may not get finished paying off this Christmas before next year’s festivities begin!

This has led to people getting what is known as a Holiday Hangover, much like the kind of hangover you normally get at Christmas, you drink too much, you feel terrible the next day. A credit hangover works in a similar way; You spend too much, you end up feeling just as rotten when the bill comes through the next month showing how much you now owe.

However, there is a growing problem with the amount we’re spending over the holidays. There is hundreds of pounds worth of unsuspected expenses over Christmas which we may end up paying for on credit cards just naturally, the most of which is food. Food is the hidden expense of Christmas; invariably you will be having family members round for Christmas dinner or after dinner nibbles round at the relatives. You’re buying more food for more people equalling a bigger cost. This is one factor to remember when spending over Christmas.

So when shopping for Christmas next year make sure that you are careful with the credit cards, if you want to be even cleverer with your cards consider looking into cashback offers and 0% credit cards so you don’t get charged extra on purchases.

Christmas is fast-approaching and everyone in the family will want the latest must have gadgets and toys. As well as the gifts there’s all the food, drink and entertainment to pay for, but recent research found that in order to pay for it all last year, two in five people in the UK used their credit cards.

Furthermore the survey, carried out by price comparison website ‘Savebuckets’, found that one in five is still paying for last year’s excesses only eight weeks before this festive season, and by Christmas day almost 17% will not have totally cleared last year’s debt. Reaching for the plastic is commonplace when it comes to paying for Christmas, as 41% of UK credit card holders admitted to using their cards to pay for gifts, food and drink, with only 29% of those using their cards in the build-up to the festive season, paying off the full balance in January.

However, the report’s authors think that last year’s average Christmas spending of £837 per person was a peak that will not be repeated this year. They point to higher housing and utility costs this year, and the fact that people will have much less cash to splash around; add that to the amount of people who are still paying off last year’s bills and the picture looks gloomy for retailers, as well as those still trying to clear last year’s bills. Those with balances still remaining on their cards will have spent most of the year searching for new credit card deals with zero-interest balance transfers to which they can transfer their Christmas burden, and make way for this festive season’s spending.

Marc Ames of Savebuckets said: “A large percentage of Brits are still struggling to pay off spending from last Christmas. With interest rate rises and the rising cost of living impacting on spending power, it is likely that most of us will be making cut-backs this Christmas.”

Indeed, experts that regularly compare credit cards spending levels to those on debit cards are expecting to see more spent using the latter this Christmas as the credit squeeze bites, and people become more cautious about their spending. The writing is on the wall; if you intend using your credit cards to pay for the festive season then make sure you clear it as soon as possible, as you don’t want to be paying for it in the run up to next Christmas.

This year people are planning to spend more on Christmas than they did last year. There’s only one week to go now until the big day and analysts are saying around £12 billion will be spent in this last week before Christmas. £2.1 billion of the £12 billion will be spent on credit cards which equates to 18 per cent of the total UK’s spending this week, an incredible percentage! This year we’re spending approximately £3 billion more than was identified this time last year.

Credit cards are a very quick and easy way to pay for your Christmas shopping but also can provide good rewards if you use them wisely. Credit cards also provide a certain degree of security because they save you from withdrawing and carrying cash around whilst Christmas shopping.

You need to ensure you choose the right credit card for your circumstances because they all offer different incentives and have varying terms and conditions. For example some credit cards offer 0 per cent on purchases for an introductory period, ideal for last minute Christmas shopping. Some credit cards offer these 0 per cent deals plus cash back or reward points, so depending on how much you’re likely to spend, it may be worthwhile considering a cash back credit card if you’re planning on a very big spend. Some supermarket credit cards will offer higher cash back or rewards in store when you use the card to pay for goods bought from them – again if you’re buying your Christmas food, wine and beer from a supermarket that offers a credit card why not take advantage of them this year?