This year, like every other, is set to see hoards of Christmas shoppers hit the high street in search of the perfect present. But considering a large majority of news stories over the past year have centred on just how little money we have to spare, where are the Christmas funds coming from?
It has been estimated by R3, that around 3.5 million people will take out a pay-day loan in the next six months to cover the cost of Christmas.
Pay-day loans are a fast way to accessible funds, often being offered as instant or same day transfers, but of course there is always a catch, and this catch can weigh in at 4000% interest rates.
Although they are one of few loans for bad credit options, they should be used as the very last resort. Often inflicting more debt on people and beginning the spiral that so many Brits are likely to fall into.
The worrying statistics mean that 2012 may be a debt filled year for most, but how can this be avoided?
A simple and obvious suggestion is sacrifice your spending over the Christmas period in favour of a less strenuous financial situation in the New Year. But for some this just isn’t an option.
If you make the decision that there really is no other option that to take out a payday loan you should be aware of all the advantages and disadvantages that come with that decision.
Payday loans are usually for amounts between £100 and £500, with a borrower’s charge of around £25 per £100. So a £200 loan will cost you around £250 if you meet the repayment date.
The downfall really comes if you are not able to repay the loan on the agreed date, interest rates are then added onto the loan and are notoriously high. And the longer you go without paying the more into debt you will fall.
With huge interest rates it is advised that you only take out the amount you are 100% sure you can repay on the agreed date otherwise a £500 loan could end up costing you thousands.
So think very carefully about how you are financing Christmas and cut back everywhere possible before considering a payday loan. It may mean a slightly more modest Christmas 2011, but could mean a far more prosperous 2012.