A recent survey by KIS Finance has revealed that 57% of people will take out additional credit in order to cover the costs of Christmas this year.
Christmas is often considered the most expensive time of year, but couple that with the current rate of inflation and rising living costs, and many people will now be turning to short-term credit options to get them through the festive season.
The survey of 2,000 people revealed:
When the data is split by the types of credit that people will take out, the most common credit facility is Buy Now Pay Later services with almost half (48%) planning to utilise these to cover Christmas shopping.
|Type of credit||Credit card||Overdraft||BNPL services||Personal loan||Payday loan|
Holly Andrews, Managing Director at KIS Finance and personal finance expert says:
“The past year and a half has taken an unprecedented toll on people’s personal finances and the situation is getting critical for the UK’s poorest households.
Fuel and energy prices have skyrocketed and grocery inflation has hit its highest level in 14 months. The Bank of England also predicts that overall inflation will hit 5% next year.
Financial support from the government, particularly for those on Universal Credit, has also lessened in recent months as we get further away from the peak of the pandemic.
The fact that so many are planning to take out credit to cover the costs of Christmas this year is concerning as this means that many will be starting the new year with expensive debt.
Credit cards and overdrafts are a notoriously expensive way to borrow money, especially if people can’t afford to pay them off quickly. So this will only be worsening the situation for those who are already struggling financially.
Buy Now Pay Later services, particularly Klarna, have seen rapid growth in the last year with millions of people across the UK now using this payment method for shopping online. A lot of retail websites now bombard you with pop up adverts and banners advertising Klarna when you shop online, so they are almost impossible to avoid and can be very tempting for people whose finances are tight.
Considering how accessible BNPL services are, unfortunately it’s not surprising to see that so many are planning to use BNPL to pay for Christmas shopping.
Although these services offer interest-free lending, they are only designed for short-term use. If you use them for multiple purchases then the debt can build up quickly and become very difficult to pay back. Some shoppers also don’t realise that their credit score can be affected by using some elements of these services and that debt collectors can be called upon if payments are repeatedly missed.
It’s important that people really think about what they need to spend money on over the festive season and what are simply extravagances. We all want to treat our loved ones and ourselves at Christmas, but it’s important to not get yourself into crippling debt for months to come just for one day.”
From a survey of 2,000 people conducted by KIS Finance. The survey was carried out online between 8th November 2021 and 12th November 2021.
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Last updated: 15 November 2021 | © KIS Bridging Loans 2020 |