The Cost of Christmas Debt

“I don’t remember spending all of that”, you think to yourself, and then the panic sinks in. You have no idea how you’re going to pay this bill!

This is not the time to panic.

Once you’ve calmed down, the real work can begin. January is the perfect time to review your financial situation, even if you aren’t in financial shock. Millions of people across the UK rely on credit cards and Buy Now Pay Later to get through Christmas, and many are still dealing with that debt well into spring, so you are not on your own.

Here’s how to go about it...

Look at your debts. How much is due now, and how much will be due in February? Credit cards, in most cases, don’t require immediate repayment — there is usually a period between the statement date and the payment due date. Many UK cards also offer up to 56 days interest-free from the date of purchase if you pay the statement balance in full.

Check how much time you have to pay each credit card bill (if you have more than one). This way, you can prioritise the ones due earliest and optimise your cash flow.

Most consumer credit debts, such as credit cards, store cards, and many personal loans, are classified as non-priority debts, meaning they are less urgent to pay than certain essential bills. Yes, we understand this might be difficult to grasp, but it’s true — this is how they are treated in UK debt advice guidance.

In short, you should avoid prioritising these debts over essentials like:

• food and water
• mortgage/rent payments
• utilities
• council tax
• secured debts
• child support/maintenance

In UK debt advice, these are your top priorities: missing payments could result in losing your home, essential services, or even your freedom.

We're not suggesting you stop paying your unsecured debts. However, these are typically the first to be reduced, if necessary, through an agreed process when facing financial difficulty. Our Token Payment Method (TPM) can assist with this. If you’re worried about your credit rating, our article "Is Your Credit Score Really That Important When You're Struggling Financially?" will help address that concern.

Communication is key; we can’t stress this enough. If you are struggling, tell your creditors that you are (in writing). The good news is you are protected by FCA rules in the Consumer Credit Sourcebook (CONC 7.3), which require firms to treat customers in arrears with forbearance and due consideration. This can include considering reduced or token payments and suspending, reducing or waiving interest and charges where appropriate.

This means you may have options such as making token payments towards your unsecured debts. However, it is your responsibility to inform your creditors that you are experiencing financial difficulties. Please do not ignore the situation and hope it goes away, as most of the time it won’t.

If you know someone, consider talking to them about your situation. If you don’t feel comfortable speaking to anyone around you, we’ve got you covered! Join our supportive, non-judgmental community free of creditors and debt collectors. Be sure to read our article “Coping with Financial Stress: Breaking the Silence on Money Worries in the UK”, which explains the importance of discussing financial struggles.

It’s surprising how few people do this — check for unnecessary expenditure. It could be an Audible or Netflix subscription you are no longer using, or membership payments for a gym you’ve found reasons not to go to; yes, you know who you are!

Subscriptions are often overlooked because the amounts are small and less noticeable than larger payments. Print out your bank statements and be ruthless. If you’re not using it, cancel it.

The only expenses that should be left after this exercise are those that are essential to you. If you need Audible or Netflix for your mental well-being, keep it! The same applies to items like a gym membership. You need to decide whether you are definitely going to start using it now or if you'll start next week, which then becomes next month, and so on... Well, you know how it goes.

Compare your costs! Are you paying more than necessary? Think about insurance, weekly shops, utilities, and the rest. We understand that sometimes you might not feel like going through the process, but if you’re concerned about money in January, you need to face it. You may be pleasantly surprised by how much money you can free up just by doing this exercise.

Christmas is the season for giving, receiving, and, oh yes, decluttering. Be honest, are you a hoarder? If so, this is the perfect time to change your approach and unleash your entrepreneurial spirit by selling all the old items you no longer need. Yes, we mean all of them!

Again, it’s about being ruthless; you know deep down if you need or will use an item, so don’t keep it just for the sake of keeping it. Selling items you no longer need is a quick way to generate some cash to help you get through this difficult period.

You might be sitting on more value than you realise. Research on the UK second-hand economy shows that many households have hundreds of pounds’ worth of unused items sitting around. Just remember, one person’s trash is another person’s treasure.

The Real Debt Guy is a qualified financial adviser and a UK debt expert. The information in this article is considered to be true and correct at the publication date.