How were your Christmas expenses?
Did you stay on budget?
Or did you splurge?
Well, according to new research by Finder, a credit-funded Christmas has pushed millions of Aussies into debt.
The survey of 1,086 respondents revealed almost half (49%) of Australians – equivalent to 9.8 million people – have racked up Christmas debt.
The research found 1 in 3 (36%) will take up to 5 months to pay off their festive debt, while 8% will take at least 6 months or more.
A further 4% – equivalent to over 800,000 people – say it will take them 12 months or more to settle.
Millennials went on the biggest spending spree, with 2 in 3 (71%) accumulating debt, compared to gen X (39%).
Amy Bradney-George, credit card expert at Finder said it's supposed to be the most wonderful time of the year, but for many Australians, the holiday season can also be a source of financial stress.
She further commented:
“The expectations around buying gifts for loved ones, travelling to see family and other holiday activities can lead to overspending and more reliance on credit.
With the added financial strain from the rising cost-of-living, many people are finding it harder to stay within their budget and avoid falling into debt.”
Making a budget is key to eliminating holiday season debt
According to Bradney-George, a budget helps you take stock of the money that’s coming in and going out.
She further said:
"Seeing your income, expenses and debts in one place can also help you prioritise your financial goals and avoid overspending.
Look for ways to trim your spending on things like dining out, entertainment, and unnecessary purchases.
Consider setting a spending limit for yourself and avoiding unnecessary purchases until you've paid off your Christmas debt."
The survey showed that men overspent the most with 55% carrying some level of Christmas debt, compared to 43% of women.
Bradney-George urged those struggling with credit card debt to consider if a balance transfer is right for them.
She explained:
"You can transfer your existing balance to a new card and get a low or 0% interest rate for an introductory period – some up to 36 months.
This helps you save money on interest charges while you pay off the debt.
If you’ve got a balance of $5,000 on a regular credit card, you could save more than $2,000 in interest with one of these balance transfer credit card offers.
If you're still struggling to manage your Christmas debt, consider seeking the advice of a financial professional.
They can help you create a plan to pay off your debt and improve your financial situation.
You can talk to your bank about financial hardship options, or speak to an independent financial counsellor for free by calling the National Debt Helpline on 1800 007 007."
How to do a balance transfer
- Compare balance transfer offers. Compare offers and see how much you could save. Be sure to calculate the annual fee and balance transfer fee before you make your pick.
- Apply for a new card. Read the requirements, gather your documents and request the balance transfer during the application.
- Activate your new card. When you receive the card, activate it by phone or Internet banking (and start making repayments).
- Close your old account. You are not required to close your old account, but it's usually a good idea to help you stay out of debt.
