Squeezed household finances and the highest level of inflation for decades have resulted in fewer than a quarter (24%) of people surveyed by YouGov for StepChange Debt Charity saying they will comfortably be able to afford Christmas this year, compared with nearly half (45%) last year.
A further one in four people (25%) say they expect they will struggle to afford Christmas, while three in ten (30%) say they will have to cut back on their normal expenses in order to fund their festive spending. Two per cent of people say they won’t celebrate Christmas at all this year due to cost.
With living costs now taking up such a large proportion of people’s incomes, one in twelve (8%) people will be relying on credit this Christmas. Of those who intend to borrow on credit, four in five (81%) said their reason for using credit was due to a higher cost of living and two in five people (41%) said they were currently struggling with their household finances.
The new polling also shows that more people will be turning to credit options like credit cards and Buy Now, Pay Later (BNPL) to fund their festive spending.
When asked about what types of credit they will be using, the most common was credit cards with three in five (61%) planning to purchase festive items using a credit card and pay the balance back gradually next year. Over a third (37%) expect to use their overdraft. The use of BNPL is notably on the rise with two in five (40%) of those who expect to borrow intending to use it, up sharply from just over a quarter (27%) for Christmas in 2021. Intended BNPL usage is even higher among women (45%) compared to men (32%).
Almost three in ten (29%) of those borrowing to fund Christmas this year said they expect it will take them 6 to 12 months to pay back the credit used, while almost one in five (18%) said they think it could take more than a year.
Richard Lane, Director of External Affairs at StepChange Debt Charity, said:
“While it can be a special time of year to celebrate with family and friends, Christmas can also be a financial strain, with many feeling pressure to spend beyond what they can afford. This year, with household budgets already stretched to their limit by the cost of living crisis, consumers may be especially at risk of being drawn into using short term credit products which are widely advertised as a way of funding a happy Christmas.
“The reality is with no sign of inflation easing, and energy bills set to rise further into 2023, taking out unaffordable credit over the festive season may only lead to a debt hangover in the New Year and beyond which may prove difficult to overcome. Most years, StepChange sees demand for debt advice leap by around 50% between December and January, but there may be steps you can take to reduce the risk of a New Year debt hangover.
“Everyone is feeling the pressure on their finances right now, so it’s worth exploring with your loved ones how Christmas can be celebrated in a way which doesn’t risk anyone experiencing financial problems in January.
“If you’re thinking about using credit cards or Buy Now, Pay Later to fund your festive spending, do pause and consider whether you will be in a position to comfortably meet the repayments. If you’re worried about your finances, you don’t need to suffer in silence – and you don’t need to wait until January.”
Free, confidential debt advice is available 24/7 using StepChange’s online debt advice service, or by telephone during opening hours on 0800 138 1111. While debt charities typically see an upturn in demand for their services in January, there is no need to wait until then to take the first step to resolving debt worries.
Note for Editors
- All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 2,091 adults. Fieldwork was conducted between 29th and 30th November 2022. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).
- An updated questionnaire was used to carry out the survey this year.
- Polling from 2021 was undertaken online between 30th November - 1st December 2021. Total sample size was 2,007 adults (aged18+).
Here are StepChange’s top five tips for saving money this Christmas, which can be used to accompany an article. More tips are available on request:
- Go through your budget to look at what you can realistically afford to spend over the festive period. This is a really helpful way to identify how much money you have spare to go toward Christmas planning. StepChange has a step-by-step guide to help you create a budget and create a clearer picture of your finances.
- Keep your eye out for deals or offers on items you know you want to buy this Christmas, but don’t get drawn into buying things you didn’t need in the first place – a deal is only a deal if you were going to buy it anyway. Making a list in advance of your Christmas shopping may help you to stick to it and prevent you from buying extras you may not need.
- Set budgets for friends and family gifts or use ‘Secret Santa’. We are all feeling the pressure of increased prices for essentials at the moment, so it may be helpful to discuss with your family and friends the best way to help those who may be struggling financially this Christmas.
- Think carefully before you borrow money - try not to get drawn into short-term high cost credit, or options to buy now and pay later if it’s not affordable. If it’s going to take many months to repay what you borrow to pay for Christmas, it’s worth pausing for a moment to think about whether your friends and family would really want you to suffer financially as a result of your generosity.
- Travelling for Christmas? Book tickets in advance for the cheapest fares, and make the most of off-peak discounted travel, family travel or rail sales.