CCPC research shows 1 in 3 consumers plan to borrow to fund Christmas spending
December 10, 2021
New research released today by the Competition & Consumer Protection Commission (CCPC) on Christmas spending and finances has shown that consumers expect to spend an average of almost €1,000 this year.
Households with children plan to spend up to 80% more compared to those without. While the majority of consumers (65%) reported that they will use their savings to fund their Christmas spending, 1 in 3 (34%) consumers said that they intend to borrow to help cover their Christmas costs this year, with credit cards being the most popular type of finance (29%). The CCPC is cautioning consumers who are considering using credit to help fund their Christmas expenses to look for a cheaper credit option before using a credit card, and to limit their debt as much as possible.
The CCPC’s caution comes as new forms of credit, such as ‘Buy Now Pay Later’, are increasingly offered to consumers who are buying online and instore. Similar to credit card debt, store finance options such as ‘Buy Now Pay Later’ can seem very attractive and appear to limit the financial cost of Christmas. However, these debts can quickly mount and consumers can end up facing multiple repayment demands in the new year. The CCPC is encouraging consumers to follow a number of steps to help manage their money and limit their debt over the Christmas period.
Average Christmas spend almost €1,000
When asked how much they planned to spend this Christmas, 6 in 10 (59%) consumers said at least €500, with 1 in 3 (30%) planning to spend €1,000 or more. Expected spending was significantly higher among those aged 35-54, with 43% planning to spend at least €1,000, and a further 17% of this age group expecting to spend at least €2,000 over the festive season. The research showed that having children under 18 is a key factor in Christmas spending, with those with children living in their household planning to spend an average of almost 80% more (€1,397) than those without children (€787).
1 in 3 to use credit to fund Christmas Spending
When asked about how they plan to cover their Christmas costs, the majority (65%) of respondents said they will use their savings, while 1 in 3 (34%) plan to use some form of borrowing, such as credit cards, a loan from a bank or credit union, store finance, or a loan from a money lender.
Consumers with and without savings were found to be equally likely to borrow to cover Christmas costs. Credit cards (29%) were found to be the most popular form of credit this Christmas, followed by store finance options (4%) such as hire purchase or ‘Buy Now Pay Later’ credit arrangements. A further 4% of respondents plan to sell investments to cover their Christmas costs, while 3% intend to avail of a traditional loan from a bank or credit union. The CCPC’s research showed that 53% of respondents who already have a credit card plan to use it over Christmas, while 35% of those who already use store finance expect to continue using it to cover Christmas costs.
22% to spend more than last Christmas
When asked to compare their expected expenditure against last year, the majority (57%) said they would spend about the same as they did over Christmas 2020. 1 in 5 (22%) said they plan to spend more this Christmas, with a similar cohort (20%) intending to spend less than they did last year. Research insights also showed that those with higher incomes were more likely to increase their Christmas spending this year, while those with lower incomes reported they will spend less this year.
Price increases tops the list of reasons for spending more
Among those who plan to spend more this Christmas, an increase in prices (58%) was the most commonly cited reason, followed by wanting to make this Christmas extra special (52%). Over 2 in 5 (46%) said they had more presents to buy, whilst a similar cohort (45%) just felt like splurging this Christmas. 1 in 3 (33%) said they planned to spend more as they had more savings, with 32% citing a higher income as a reason for spending more. 1 in 10 (11%) said easier access to credit or loans was a key reason why they planned to spend more this Christmas.
Grainne Griffin, Director of Communications with the CCPC said:
Between presents, food, clothing and decorations, Christmas can be a very expensive time of year. Our research shows that consumers expect to spend an average of nearly €1,000 over Christmas, rising to over €1,300 for those with children in the household. This is a significant amount for most families and for 1 in 3 it means they will go into debt to cover their Christmas costs.
Although there are now many different ways and means to access credit, it’s important for consumers to remember that all credit options come at a cost. Even credit options which may seem like easy solutions, such as credit cards or store finance, can be very expensive if you stretch your repayments out into the New Year. It’s crucial that consumers keep track of their debts and when repayments will fall due. From credit cards to online loans and ‘Buy Now Pay Later’ shopping options, it has never been easier to accumulate multiple debts and run the risk of becoming overwhelmed by repayments once the festive season is over. With many consumers shopping earlier this year, this may mean that credit card bills and other repayments may also fall due earlier, potentially before Christmas.
We are glad to see that 2 in 3 consumers have savings that they will use to fund their Christmas expenses. We know that, where you can afford it, having a savings account that you can dip in to for these kinds of short-term additional expenses is one of the most effective ways that consumers can increase their financial resilience and manage their overall financial wellbeing.
We’re asking consumers to follow a number of simple steps this Christmas to help them make sure they are spending within their means and to avoid carrying debt into the New Year. If any consumer needs additional information on managing their money this Christmas, or would like to compare loan interest rates, they can use our independent Money Tools or call our helpline on 01 402 5555.
CCPC consumer guide to managing your festive finances
- Make a list of all the items that you intend to buy over Christmas, including presents, food, decorations and clothing. Allocate how much money you are going to spend on each and stick to it as closely as possible. This kind of basic budget can help you keep track of your spending and limit impulse purchases which can quickly add up and bring you over your budget.
- Set your credit limit if you do need to borrow to cover your Christmas costs. Decide how much you are going to borrow and where you will borrow from. Otherwise, it can be easy to build up a lot more debts than you intended.
- Consider consolidating your debt by using a personal loan to combine a number of smaller debts into one single debt, to help make repayments easier. Alternatively, consider using a single form of credit to help avoid feeling overwhelmed by several repayment plans to multiple lenders.
- Research your finance options based on how much you need to borrow and the total cost of credit, the main indicator of which is the interest rate. Visit ccpc.ie to compare credit card and loan interest rates in just a few simple clicks. Keep an eye out for introductory offers such as 0%, which can be a good option, but only if you pay the debt off during the offer period.
- Limit your credit card spending over Christmas so that you avoid beginning the new year with a hefty bill. Credit card debt is very expensive if you don’t pay your bill in full every month. It can be tempting to only pay off the minimum balance on your credit card each month, but this will cost you a lot in interest and it could take years to clear your debt.
- Check the T&Cs of ‘Buy Now Pay Later’ credit options. If you miss a payment, you may be charged a late payment fee which will increase the cost of what you bought. Missed payments can lead to a negative credit rating, which could prevent you from getting other loans or credit, such as a mortgage, in the future.
- Make a new year repayments plan by working out what repayments are due on what date. Try to pay off any debt as quickly as possible, as the longer the repayments period, the more it will cost you in interest. Prioritise paying the debt with the highest interest rate. If you have savings, consider using some of it to pay off your debts, as this could save you money on interest and allow you to save more in the long run.
