Almost 14 million people plan to borrow money for Christmas, Hanukkah or other religious and cultural holidays over the next three months, according to the Money and Pensions Service (MaPS).
Research by the Government-backed money advice service found that millions of people are set to use credit cards, buy now pay later, or loans from friends or family over the festive period.
Among those, half (52%) said they’re likely to use credit cards, while a third (35%) would use buy now pay later and one in four (24%) would opt for an overdraft. A sixth (17%) said they’d turn to friends or family and 9% would go to a credit union.
Some are considering using high-cost credit, with one in ten (12%) saying they’d use payday loans and one in 20 (6%) going for pawnbroker loans.
The study found it will take a third of borrowers longer than six months to pay it back and some will need over a year, meaning their debt could begin to spiral.
When asked how much they think they’ll borrow, almost half (45%) said between £101 and £300. One in four (23%) thought between £301 and £500 and one in 10 (11%) said more than £500.
‘Take a breath’ before you borrow
This year, MaPS is suggesting those who plan on using credit to pay for Christmas to “take a breath before you borrow.” Doing so will give borrowers time to assess their options and ensure they have a clear plan to repay the credit they take on.
Caroline Siarkiewicz, MaPS chief executive, said: “The holidays are a wonderful time of year, but they can also make people feel pressured into spending much more than they can afford. With many households already feeling the strain, it’s unsurprising that millions are looking to credit to fund the celebrations.
“What’s particularly worrying is that some will still be repaying when next year comes around. On top of the stress it can cause, this often involves using short-term products for the sort of expensive, long-term borrowing they weren’t designed for.
“Credit is a useful tool, but it’s crucial to take a breath before you borrow. If things are getting out of hand, or you start needing credit for essential costs, it might be time to seek help. Whatever your circumstances, we have dedicated resources on our free MoneyHelper service and I’d urge you to have a look today.”
