Average Brit will see in the new year with over Â£2,000 debt
As we enter a new year, data from MoneySuperMarket reveals that the average Brit will have over two thousand pounds (Â£2,172) of debt hanging over their heads.
Despite 55 per cent of Brits feeling confident that they would stay within budget over Christmas, the leading price comparison website reveals that eight in 10 would expect presents for family and friends to be the cost that tips them over budget, followed by spending too much on food (36 per cent).
MoneySuperMarket’s findings also show that a quarter of Brits expected to pay an average of £151 more overall this Christmas, compared to last year. In fact, the festive season is set to drive Brits to put nearly £300 on their credit cards, equivalent to a third of their total Christmas spending.
Seaneen James, money expert at MoneySuperMarket, said: “There’s no doubt that Christmas is an expensive time of year but there are easy ways to keep costs down to avoid putting yourself in unnecessary debt.
“With the average amount of credit card debt standing at over two thousand pounds, it’s likely that many won’t have paid it off by this time next year. Shopping around for the right credit cards deals can help make substantial savings, meaning you could end next year a little more comfortably.”
For those using credit cards to manage their Christmas debt, MoneySuperMarket offers the following top tips to avoid credit card charges:
· Always pay off your balance - You should always aim to pay off the balance of your credit card in full each month to avoid paying interest.
· If you can’t pay in full, at least pay the minimum - If you don’t, you’ll get charged a late payment fee, usually £12, and get a negative mark on your credit file. The best way to avoid this is by setting up a direct debit to ensure your credit card payments are always made on time.
· Don’t use your credit card to withdraw cash - We’re well accustomed to withdrawing cash from an ATM with our debit cards and not having to pay a fee, but don’t get caught out by assuming the same rules apply to your credit card, as you will usually be hit with a charge of around 3 per cent of the amount you take out (often with a minimum £3 charge). On top of this, you’ll also be charged interest, typically at an annual percentage rate (APR) of between 20 - 30 per cent, depending on the card - and this will be levied from the moment you make the withdrawal.
· Don’t go over your credit limit - If you do, you’ll get charged. If you’ve always managed to keep within the limit and only exceed it accidentally by a few pounds, contact your credit card provider as soon as possible and ask them to waive the fee.
To work out how to clear your balance using different monthly payment amounts, or alternatively how to clear the balance by a certain date, visit MoneySuperMarket’s Credit Card Calculator.