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Financial News December 2007

Christmas Spending Repercussions

There are over four million individuals in the UK alone that are still paying for last Christmas.  One out of every ten is still carrying a credit card debt from last December.  This means that 4.4 percent of the population still has a credit card debt with holiday gifts from the previous year.  Most of the analysts are saying that it is time for most of us to cut up some credit cards and stop using them.  It is not time to stop celebrating Christmas, but it is time to start thinking about the financial repercussions of using credit cards to fund the Christmas gifts.  The idea is not to give in to the temptation of using a credit card, but to form a budget and stick with it using cash only.

When you use your credit card for Christmas it is better to pay off the debt right after you have used the card.  There are many perks for using credit cards during the holidays such as cash back for some of the purchased items.  However, individuals start getting into trouble when the credit card debt lingers on a year to year basis.  The UK payments association APACS believes there will be 53 billion pounds spent in December for Christmas, and of that 53 billion, 11.7 billion pounds will be places on credit cards.  If the individuals using the credit cards this year haven’t paid off the debts from last year they will continue to increase their debts.  It seems that about 54 percent of the adults from last Christmas either paid off the amount in a month or less or they did not get into debt last Christmas.  There were 9 percent that took two to five months to clear the debt.

However with the credit crunch going on world wide there have been significant changes in the credit card market this year.  Many lenders have been tightening up their application criteria as well as their rates, and limits.  This means that many of the credit card applicants have been turned down. 

For those who have been accepted there are still some great deals out there.  These deals can help cut the debt of the borrowers to a more manageable number.  There are over 70 percent of standard credit cards offering zero percent interest on balance transfers, with an average period of ten months for that introductory offer.  The borrowers are usually paying 2 to 3 percent for the balance transfers.  Halifax is among one of the credit cards offering the longest deal for balance transfers at fifteen months.  Virgin Money is also offering that same interest free period on purchases.  When you consider using your credit card for the Christmas season make sure you have the right cards to service you.  With the deals that are out there, and if you can get approved you may just be able to lower your debt, enough that you are one of the 54 percent this year that gets their Christmas debt paid off in one month. 

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