FOMO spending and how to avoid it
A third of Brits overspend due to fear of missing out (FOMO), but this rises to three in five (58%) of UK millennials.
As many as a quarter (27%) of FOMO spenders have been left with debt, with a third saying they rely on credit to keep up, according to research by credit score provider Noddle.co.uk. FOMO spending costs Brits almost £9 billion a year, with an average cost to each FOMO spender of £500.
22% of Brits say FOMO spending has seen them struggle to keep up with their credit repayments and for a quarter of them, it has affected their credit score. Noddle.co.uk says the pressures become particularly acute around Christmas time.
Jacqueline Dewey, managing director of Noddle.co.uk said: “The pressures of social media, keeping up with friends and FOMO mean that we are at risk of spending a little too much. No one wants to be left out, but especially in the lead up to Christmas, it’s important to consider what money you have coming out of your bank account.
“FOMO spending can become a problem if people start to rely too heavily on credit. Although it’s common to put a bit more spending on credit during this time of year, with the additional expenses of Christmas, we advise keeping on top of repayments and only using what you know you can afford to pay back. This way you won’t risk impacting your credit score.”
The group gives five tips to protect your credit score and avoid a financial hangover this festive season
Treat all credit with respect – Retailers are aware of growing consumer demand for credit this time of year and therefore offer special deals on store credit. Although this can be an attractive option, giving you access to interest-free periods and money off purchases, it’s important to treat it with respect. Avoid applying for lots of store credit in a short space of time, as that can affect your score. And as is the case with all forms of credit, missed payments can attract late charges and show up on your credit report. So, make sure you always pay everything on time and in full.
Avoid overspending – It sounds obvious, but many people struggle to keep their spending under control during the lead up to Christmas. If there’s a credit rule you should live by it’s this: only spend what you can actually afford to repay. Draw up a Christmas budget before you start spending.
Have a credit strategy – Using credit to spread the costs of Christmas can be an effective financial strategy, but make sure you know what your credit limit is before you start spending, as going over it may affect your score – signalling that you’re not coping well with your current financial commitments.
Don’t be afraid to say no – There can be lots of pressure to join in with everything that’s going on at Christmas, but if your financial health (or physical health) starts to suffer, remember it’s perfectly OK to say no to your friends.
Fraudsters like Christmas – While fraudsters are an issue no matter what time of year, online scams become particularly prevalent during the festive season. If targeted, fraudsters may use your personal information to make fraudulent credit applications. This activity would appear on your credit report and could potentially damage your credit score.