Over-indulgence and unaffordable kindness are plunging tens of millions of shoppers around the world into serious debt throughout the Christmas period. Consumerism during the holiday period is wrecking personal finances thanks to over-investment in festive gifts, food and décor. Here we look at how Christmas debt is affecting the USA, UK, Australia and New Zealand.
Consumer counselling agencies in the USA see a 25% increase in activity throughout January and February as record numbers of consumers seek help in the wake of over-spending during the holiday period. A number of these counselling groups blame credit cards, suggesting that many American consumers don’t fully comprehend how much they are spending until the credit card bill lands on their doormat.
Durant Abernethy, president of the National Foundation for Credit Counseling, explained: “A lot of people get by, paying the minimums on their credit cards. Add on the holiday bills and all of a sudden, those minimums are more than they can afford. People in trouble generally don’t have a good idea of how much they spend.”
The debts have grown so severe in some areas of the country, good Samaritans are putting money aside in toys stores to ensure children don’t miss out on their Christmas presents.
Alongside increasing credit card spend, UK citizens are further plunging themselves into debt by seeking payday loans to help fund the Christmas festivities. The short-term, high-interest loans are set to be employed by roughly 1.4 million Britons this year, many of which will suffer high repayment rates. It is anticipated that Christmas will cost the 64 million citizens of the UK an astonishing £26 billion.
The average UK household’s Christmas 2013 debt was only paid off in November 2014, demonstrating year-after-year monetary woes caused by over-indulgence over the holiday period.
Luke Notley of debt management specialist, In Control, warned: “It is vitally important for all consumers to plan early, draw up a budget and stick to it. Furthermore, never spend next year’s wages on this year’s Christmas.”
Financial Counselling Australia has moved to reproach the intense marketing campaigns of consumer products during the Christmas period, suggesting it puts extensive pressure on citizens to over-spend.
Carmel Franklin, chair of Financial Counselling Australia, suggested: “It’s a time when you feel you have to spend money on a range of people, and there’s certainly a huge amount of pressure and marketing which means you sometimes end up spending more than you can afford. Suddenly you get a credit card statement and you’re paying it off until next year. You want it to be a pleasant time but if it’s going to lead to stress, it defeats the purpose.”
Research from the financial comparison company, RateCity, revealed that almost a third of Australians felt pressured into spending more for Christmas than they could realistically afford. The average Australian adult is expected to spend $511 AUD this Christmas – leading to a total national spend of more than $8.5 billion AUD.
Despite its tiny population of just over 4.5 million people, it is anticipated that New Zealand’s total credit card spend will be more than $4.6 billion NZD this Christmas. Paul Whiston of New Zealand’s leading electronic payments provider, Paymark, suggests the credit card spend in department stores, appliance outlets and electronics stores throughout December will be higher than the other 11 months combined.
Festive spending during the Christmas period is crippling many New Zealand nationals, with the country paying more than $600 million NZD in interest on personal credit card debt every year. Christmas is the major contributing factor to this amount every year.