UK Finance News

Pre-Christmas independent research released by Money.co.uk today,  suggests that the majority of Brits have made no provision for Christmas expenses this year, increasing the likelihood of a major hit on credit cards and the like over the festive period. Worryingly almost 5 million (10%) of Britons have admitted that they are still paying debts off from last Christmas.

The research revealed that while 31% of adults are worried about how they will get through Christmas financially, only 15% have made an effort to spread the cost throughout the year.

Credit cards (14%) and savings (10%) will be used to fund festivities for some this year, but 71% say that they will use ‘money available at the time’ to purchase their share of the nations estimated £11bn Christmas spend.

Money.co.uk warn that reliance on paying at the last minute could see many families stretched to their financial limit, as current trends show that each household will spend an estimated £500 on food and presents, even though the average disposable income stands at £164 per week.

As a result many households will start the New Year feeling the pinch more than usual and face a grim start to 2010 with a long wait for pay day.

Here are some tips from Money.co.uk that could help you enjoy this Christmas and not have to worry too much about finances:

1. Take control of your finances: Have a look at your finances and work out what you have coming in and going out over the next three months.
2. Set a sensible Budget: From that work out what budget you need to allocate.  Be realistic, don’t set a budget you can’t stick to and plan for any last minute unexpected items.
3. Shop Around: The key to success at Christmas is being canny and keeping an eye out for the best deals.  Some sales are already on, so start ticking off those presents now by picking up a sales bargain.
4. Be card smart: If you’re planning to pay for Christmas on a credit card this year, there are some sensible measures you can take to reduce the pain later:

• Cashback Credit Cards: most cashback credit cards pay between 0.5% and 5% of any purchases you make, e.g. if you spend £500 on your credit card over the course of a month you get £25 cashback at the same rate.  These cards tend to suit people who can pay their balance off in full each month as interest rates may be higher than standard credit cards.
• 0% Purchase Credit Cards: Some providers offer 0% on purchases as an introductory offer. For example, Tesco is currently offering 0% on all purchases for 12 months.  As an added bonus you’ll also earn Clubcard points as you spend, which will help when January comes.  However, it is important that these cards are not used simply to delay a problem for a year.  The balance should be paid off before the interest free period expires, either through monthly payments, or by regularly putting money aside in an interest bearing account so the card balance can be cleared in one go before interest is charged.

And finally a list of do’s and dont’s:

• Don’t be tempted by store cards, which often charge very high interest
• Don’t be tempted to get a loan to pay for the additional expense of Christmas. Be realistic about what you can afford.
• Do agree a present budget with friends and family, so everyone is clear what to spend and there is no pressure to spend more than anyone can afford.
• Do start thinking about next year, by looking into regular saver accounts that can offer a really attractive rate of interest.