Credit crunch could mean a New Year hangover for South East Christmas shoppers
December 11, 2007 12:00 AM
With just two weeks to go until Christmas, City firms are already predicting that many families in the South East will finance their Christmas on credit cards.
British shoppers are expected to spend £53 billion over the festive season this year, £11.7bn of which is likely to be on credit cards. But people in the South are the most likely to use credit to pay for Christmas, according to a recent survey.
Sharon Bowles Liberal Democrat MEP for the South East is concerned that those who decide to splash out this year may pay for it through the nose come the New Year. "By now we have all heard of the turmoil in the financial markets but few fully understand what this can mean for us in our day to day lives."
Many credit institutions have redrawn their lending rules over the last few months making it more difficult for those with big debts to borrow more. Some credit card companies have already turned down 50% of new applicants.
"This is all well and good now but those with existing debt really need to take care. Some City firms are predicting a sharp rise on the number of personal insolvencies next year as a result of over-borrowing. Average household debt, including mortgages, has almost doubled in just seven years from £17,000 per adult in 2000 to £33,000. Defaults on payments and even home repossessions could be on the cards if we do not act sensibly. This is even worse for young adults starting their working lives saddled with student loan debt."
"Paying with a credit card can have its advantages, it's quick and easy and often gives you better consumer protection should something go wrong. However, if you do not pay it off in full each month it is little more than a very expensive loan."
The Citizens Advice Bureau has seen a 20% increase in debt enquiries in the last year and credit card debt and unsecured loans have dominated their calls. 1 in 4 of all debt enquiries last year concerned credit and store cards.
"There's no need to be a bah humbug this Christmas but we must shop with our eyes fully open. If we don't the danger is we will find ourselves with a financial hangover lasting long into 2008!"
ENDS
Notes:-
APACS http://www.apacs.org.uk/media_centre/07_11_15.html
Deloitte The Retail Review, Christmas Retail Survey 2007 http://www.deloitte.com/dtt/cda/doc/content/uk_cb_christmasretailreview_2007.pdf
PwC Report Precious Plastic 2007 http://www.pwc.com/uk/eng/ins-sol/publ/PwC_PreciousPlastic2007.pdf
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