Households are urged to remain diligent with their spending this year as new research found that consumers borrowed far more than they anticipated to cover the cost of their Christmas last year.
Almost a third said they didn’t expect to have paid for Christmas borrowing until June, and 13 percent said they would still be paying off the money they’d borrowed this Christmas.
Research from Royal London, the UK’s largest life, pensions and investment mutual found that in general, consumers spent an average of £672 on Christmas 2022.
This is a fall of 15 percent compared to Christmas 2021 (when they spent £782 on average).
Customers are warned Christmas is likely to be even tougher as rising bills, housing costs and food costs mean families are spending almost £500 a month more on average than they were last year.
Sarah Pennells, consumer finance specialist at Royal London explained that their research showed the impact that the cost of living crisis has had on festive spending as consumers will be looking for a bargain this Christmas, but could also be spending even less than last year – which itself was lower than Christmas 2021.
She suggested that paying for Christmas gifts by credit card “can be a sensible move”, because of the valuable consumer protection that comes with it. However, she noted that it’s best to “pay it off straight away”.
With interest rates having risen steadily earlier this year, anyone thinking of putting their Christmas spending on their credit card and not paying it off could find it’s rather more expensive than last year, as several card providers have raised interest rates.
Ms Pennells said: “If you don’t want Christmas shopping to put you into the red, it’s vital that you budget and don’t get swept away by the bargains.
“In the tough times everyone is facing, it’s even more important to have a conversation with family and friends so you can work out if there are things that you can do to spend time together that means you can cut back on present buying, if it’s just not going to be affordable.
“Having a conversation about money at Christmas may be uncomfortable, but starting the new year in the red is even tougher.”
The research found that people spent £672 on average during Christmas 2022, compared to an average of £782 the previous Christmas.
More than a third reported they’d cut back on Christmas gifts, with women more likely to do so than men. Meanwhile, one in ten people said they didn’t have enough money to buy a Christmas tree.
Given the cost of living research shows people are spending, on average, £500 more a month on household bills and food compared to a year earlier, it is likely this trend will continue into Christmas this year, as well.
Around one in four also said they spent less on food and drinks than before, with one in five saying they met friends at each others’ homes when possible rather than socialising at the local pub.
