Debt warning for consumers as Christmas spending on plastic is set to go up

Commenting on today’s Christmas spending forecasts from the Payments Industry, Michael Ossei, personal finance expert atUswitch.com, says: “While this predicted boost in spending may be good for retailers and the economy, the worry is that consumers could be paying the price by falling deeper into debt. One in five (19%) started 2013 with over £5,000 of debt on their credit card, and if spending on plastic goes up again we could see even more struggling with a Christmas credit hangover in 2014.

“Even the leap in debit card spending could be masking debt. If consumers have maxed out their credit cards and are turning to overdrafts, increased spending on debit cards may not be a sign that consumers are living within their means.

“Nobody wants to be a scrooge, but I would urge cash-strapped consumers to think twice before getting into debt to pay for Christmas. However for those who have got cash to splash, using a card that pays you every time you spend is an easy win and a simple way to give a boost to your finances this Christmas. It’s also worth looking at bank accounts that offer cashback on purchases, which will mean rewards for spending on debit cards. This free money from festive spending is a ‘no brainer’ for anyone who pays off their balance each month in full, and could be an extremely welcome way to refresh exhausted bank accounts for the New Year.

“What’s vital is that consumers choose the right card for their needs, read the small print and check that the card suits their financial situation and spending habits. It’s also important to remember that these cards will only benefit those who are vigilant in paying off their balance in full every month. But by being savvy consumers could start the New Year with a healthier bank balance rather than starting 2014 off in debt.”