Advertisement
Money

Cost of living crisis: Christmas leads to months of debt for 1 in 5 Brits

As many as one in five people across the UK could still be paying off Christmas debt up until Easter, as the cost of living crisis and inflation forced prices higher over the festive period.

As many as one in five people across the UK could still be paying off Christmas debt up until Easter, as the cost of living crisis and inflation forced prices higher over the festive period.

Annual food inflation jumped to 13.3 per cent in December, the highest monthly rate since 2005, but the British public still splurged out on Christmas as the first in three years without the prominent spectre of the pandemic.

“The cost-of-living crisis is having a huge impact on many households and we fear this will get worse if people felt under pressure to overspend during the festive period,” said John Pears, UK managing director of credit management company Lowell, which commissioned the research.

The effects of the Covid-19 pandemic, Russia’s war in Ukraine, soaring energy costs, post- Brexit trading troubles and higher interest rates left many individuals and families in an uncomfortable financial position across 2022 with the Christmas period quickly approaching. 

Your support changes lives. Find out how you can help us help more people by signing up for a subscription

The debt aftermath of Christmas this year may be one of the worst yet as Lowell found an almost 50 per cent increase in the use of credit cards to fund the holiday. 

Advertisement
Advertisement

This comes at the same time as spiralling interest rates increased the cost of borrowing. The annual percentage rate on UK credit cards reached an all time high in 2022, leaving those who borrowed under increased pressure to pay their money back quicker.

“While it may seem tempting to use credit to ‘plug the gap’ between your income and outgoings, think carefully before you borrow money,” said Richard Lane, director of external affairs at StepChange Debt Charity said.. “Try not to get drawn into short-term high- cost credit, or options to buy now and pay later if it’s not affordable to you.”

Lowell found there was a more than 55 per cent increase in Brits feeling pressure to buy extra in 2022 in comparison to 2021 and an additional 55 per cent increase in people claiming they bought more than was needed.

Social media activity across platforms such as Facebook, TikTok and Instagram all played a part in the adding pressures to keep up with the trends this year despite rising inflation rates.

Lane said: “Last year saw the price of energy, food and other essentials shoot up incredibly quickly, so it’s not surprising that it’s been difficult for people to adjust their spending habits. Christmas can also put great financial pressure on people.”

Although many still kept up with the high end spending over the Christmas period, others struggled.

A quarter of people cut back on spending due to the cost of living crisis and an additional quarter were concerned about not being able to heat their homes during the freezing holiday period.

Shops such as Aldi, a lower priced supermarket, experienced record Christmas sales this year as more shoppers turned to the discount chain.

However, 40 per cent of Brits opted against credit cards and savings as they were able to used their disposable income to get them through the Christmas period.

“If you are worried about your finances, completing a budget is often the most important first step you can take.  Seeing what you have coming in and going out will help show what you can afford to repay on anything you owe. 

If you are unsure of what to do, contact a free debt advice service like National Debtline, or Business Debtline,” said Jane Tully, director of external affairs and partnerships at the Money Advice Trust.

Get the latest news and insight into how the Big Issue magazine is made by signing up for the Inside Big Issue newsletter

Advertisement

Every copy counts this Winter

Your local vendor is at the sharp end of the cost-of-living crisis this Winter. Prices of energy and food are rising rapidly. As is the cost of rent. All at their highest rate in 40 years. Vendors are amongst the most vulnerable people affected. Support our vendors to earn as much as they can and give them a fighting chance this Winter.

Recommended for you

Read All
How to save money AND help save the planet
Cost of Living Crisis

How to save money AND help save the planet

Student finance, discounts and budgeting tips for surviving university in a cost of living crisis
Cost of living crisis

Student finance, discounts and budgeting tips for surviving university in a cost of living crisis

Got debt? Don’t suffer in silence. Here’s how to get help 
cost of living

Got debt? Don’t suffer in silence. Here’s how to get help 

The UK is entering a recession. Here's how to prepare your finances
Personal finance

The UK is entering a recession. Here's how to prepare your finances

Most Popular

Read All
Lauren Layfield: 'Normal men, innocent men' and me
1.

Lauren Layfield: 'Normal men, innocent men' and me

Here's when people will get the next cost of living payment in 2023
2.

Here's when people will get the next cost of living payment in 2023

Where to find grants for furniture and carpets in 2023
3.

Where to find grants for furniture and carpets in 2023

Scotland aims to cut car use by creating '20-minute neighbourhoods' in net zero push
4.

Scotland aims to cut car use by creating '20-minute neighbourhoods' in net zero push