Aussies expected to spend $15.2b on Christmas, and 1 in 5 will put it on credit
The Christmas debt hangover will linger well into 2018 for some Australians.
New research from peer-to-peer lender RateSetter has revealed that 20% of Australians are relying on a credit card to get through Christmas while 1% are going to take out a loan for their seasonal expenses. Of those planning to use their credit card, three-quarters (74%) said they will pay off their statement in full come January and one in five are going to gradually pay off their credit card throughout 2018.
In total, we are expected to spend $15.2 billion this year. This is with each person spending an average of $763.
However, some Australians were prepared for their Christmas expenses this year. Over one third (37%) of Australians will use the funds in their transaction accounts while 42% are going to dip into their savings.
There were differences between generations for those relying on credit to fund Christmas. Australians over the age of 45 were three times as likely to be using their credit cards for Christmas spending, while only 8% of 19-24-year-olds said they would rely on their credit card.
For those that do need to use a credit card or personal loan to get through Christmas, having a solid strategy to pay it back in the new year is important.
"Australians putting Christmas on credit will be required to pay back the full amount in January or early February if they want to avoid interest charges," said CEO of RateSetter Dan Foggo.
Check your credit card interest rate to see how much you'll be charged if you will be repaying it throughout 2018. If you can repay it during the promotional period, a balance transfer credit card is one to consider.
Foggo said that consolidating your debt to a personal loan is another way to avoid excessive interest.
“Christmas is just one day but interest is clocked up every day of the year and quickly accumulates. For those who do find themselves putting more festive fun on their credit card than they hoped, a personal loan may be worth considering to help repay any outstanding balances quickly and reduce the amount of interest being paid.”