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Credit cards to fund Christmas spending

A recent survey by Norwich and Peterborough (N&P) Building Society showed almost one quarter of all consumers who haven’t saved for the festive season will turn to their credit cards to meet the cost of Christmas.

More from Trends and Analysis
3 November 2008

Credit cards to fund Christmas spending

Credit cards to fund Christmas spending

Almost seven in 10 us were planning on buying cheaper presents or fewer of them.

The seasonal study also found that 57% of all consumers were planning to cut back on their Christmas costs in one way or another.

Almost seven in 10 us were planning on buying cheaper presents or fewer of them. Respondents to the N&P survey, who said they would spend just as much as usual, said they were able to do this because they had saved up cash especially for Christmas.

Savers prosper

This shows that while some of us are still squirreling away cash for the festive season, not all of us are and many of us must turn to credit cards to ensure that our Christmas remains "merry".

Gary Lacey, manager of Saving Products at N&P, said: "The results of the survey show us that putting money into a savings account on a regular basis seems the best way of making sure this Christmas will still be a merry one."

Getting the right deal

Which? has been urging consumers to shop carefully when trying to find a credit card for the Christmas season and many people turn to their current lenders and banks without doing any research on the deals available.

Experts suggest using several price comparison websites is the best way to determine which card to go for.

The Bank of England has also said that over Christmas UK banks will be cutting back on their lending.

Leading finance writer Sean Poulter said: “The Bank of England is facing demands to deliver an emergency half-point cut in interest rates to try to head off a full-blown recession before Christmas.”

Christmas crunch

Talking about a "lean Christmas", Poulter added: “An official [Bank of England] study revealed banks have dramatically cut back their lending to consumers and business.”

A lot of financial analysts are also frightened of the economy becoming paralyzed and they are comparing the current spiral towards a recession to the Great Depression which hit the global economy in the 1930s.

Expert advice

As shops create store cards which have high rates of interest to tempt in those short of cash this Christmas, credit cards are upping the competition with rewards and cash back deals.

If you must turn to credit this Christmas makes sure you do your homework and get a card with as low an interest rate and as many rewards as you can. After all, you would probably rather not still be paying for this Christmas by the next.

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