‘Tis the season to be spending- and Australians aren’t holding back this year
If Christmas spirit can be measured by credit card spending, then Aussies are feeling festive this year. And while it may be fun to deck the halls with ribbons of receipts, the end result is often a throbbing post-festive debt hangover.
A recent study by Finder revealed that one in four Aussies (28%) won't have enough cash saved to cover the cost of Christmas. Instead, they'll be turning to credit cards, Afterpay and personal loans to fund their purchases.
A nation of spenders
Aussies aren't holding back despite a general lack of savings. As a nation, we're tipped to spend $18.8 billion dollars in the lead-up to Christmas. This works out to be almost $1,000 per household.
Gifts and travel top the list of holiday purchases. On average, shoppers are expected to fork out $471 each on Christmas getaways and $386 on presents for family and friends. They'll also spend $41 on charity, $40 on donations and $31 on Christmas hampers.
Those living in New South Wales will splash the most cash these holidays, forking out $1,220 on average. South Australians will spend the least, at just $628 in comparison.
Ditching the debt hangover
Credit can be a useful way of supplementing savings over Christmas. But if shoppers are unable to pay off their balance in full, interest rates (and potential late fees) can start to kick in over January. This can place a strain on household finances.
Those who end up with a hefty credit card bill may want to consider a balance transfer. This type of credit card allows users to transfer their existing debt across and comes with an interest-free period of up to 26 months. Shoppers can save a small fortune on the amount of interest payable this way.
Other ways to save
Fortunately, there are several other ways shoppers can limit the amount of debt incurred over the silly season.
Taking advantage of the pre-Christmas sales like Black Friday and Cyber Monday means you can stock up on stocking fillers at a fraction of the regular price as well. Purchasing gifts throughout the year can also be a good way of distributing costs more evenly so they don't all hit your account at once.
Picking up a side hustle can be a good way of bulking up your income to help boost your savings. Rent out a room on Airbnb, sign up as an Uber driver, offer your services on Airtasker or become an extra – every bit helps. You might even have fun in the process.
Suggest doing Kris Kringle with friends and family so you only have to buy for one person, rather than several. You'll probably find that most other people are in the same boat.
It can also be worth thinking ahead to next year and opening a Christmas savings account at the start of the year. By depositing a small amount each pay cycle, you can easily have $500– $600 saved by next Christmas.
Christmas rarely comes cheap, but it's important that shoppers remain within their means when spending. Planning ahead, switching to a balance transfer card or building your savings throughout the year will all help to ease the financial burden of the festive season.