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Plastic promises: 1 in 5 Aussies will splurge on credit this Christmas

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Millions of Australians are expected to land themselves in debt over Christmas that could take months to repay, according to new research by Finder.

A Finder survey of 1,056 respondents found more than a fifth (21%) of Aussies – equivalent to 4.2 million people – will rely on some form of credit to fund the festive period with many racking up debts they can't pay back.

More than 1 in 10 (11%) are planning to primarily use a credit card to fund the holiday season.

The research shows 7% of cash-strapped shoppers are using buy now pay later (BNPL) services to fund their holiday splurge, while a worrying 3% will take out a personal loan.

Finder's research shows the average Australian is expected to spend $1,479 this Christmas on presents, food, alcohol, eating out and travel. That's $30 billion nationwide on holiday spending.

Sarah Megginson, personal finance expert at Finder, said many Aussies could have trouble keeping up with debt payments.

"The financial pressure of Christmas has many people spending over their limits, but getting into the festive spirit shouldn't mean getting in over your head.

"If you don't get on top of your repayments, you could end up with a debt hangover that goes well past Christmas and into the new year."

Megginson urged people to spend responsibly these holidays as Christmas splurging can hurt your credit score.

"Your capacity to repay the purchases you're making, whether you're paying using credit cards, personal loans or buy now pay later, is what you need to think about before you go shopping – not after.

Megginson encouraged shoppers to create a budget to guide you through the silly season.

"If you rack up a debt of $1,479, it could cost you $148 or more in interest alone. It could be much higher if you end up paying a lot of BNPL fees, and it could take you until next Christmas to pay it off if you don't have a plan.

"Don't go into it blindly – look at how much you can afford to spend and look for opportunities to cut back in other areas, to free up some budget for Christmas.

"Now is a great time to analyse your household expenses and see where you can get a better deal on things like energy, insurance and mobile plans," Megginson said.

Finder's data shows half of consumers (49%) will dip into their savings account to fund Christmas, while almost 1 in 3 Aussies (27%) don't plan on buying anything this holiday season.

How do you primarily plan on funding this holiday season?
Credit card11%
Buy now pay later (e.g. Afterpay)7%
Personal loan3%
Refinancing my home loan1%
I don't plan on buying anything for the holiday season27%
Source: Finder survey of 1,055 Australians, November 2023

Here's 50 easy and practical money-savings tips that will help you budget and save money quickly.

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