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Last Updated:
Apr 24, 2009 - 5:31:05 PM |
The Consumer Director of the Financial Regulator, Mary O'Dea, has advised Irish consumers to plan their Christmas spending carefully this year after it conducted an online poll, which showed that 40% of respondents said they would be using some form of credit to pay for Christmas.
Commenting on the results, Mary O'Dea said: "Given recent changes in the economy, a lot of consumers are already aware of the need to plan their Christmas spending carefully. Our recent online poll showed that almost 60% of participants had put money away for Christmas. However, I would urge consumers to budget first, and buy second this year so they don't start the new year in debt. If you do plan to use some form of credit over Christmas, have a clear idea of how you are going to repay it. Also, bear in mind how your Christmas spending will impact on any plans you have for next year such as saving for a holiday or putting money aside for a rainy day."
Mary O'Dea says - Here's how to avoid starting the new year with a financial hangover:
1. Make out a list before you go shopping: this will save you money and help you avoid impulse buying or spending too much on something you cannot afford in a last minute panic. It'll make it easier to keep track of your spending.
2. Stagger your spending over a few weeks to spread the expense of Christmas: this will make it more manageable for you and will help you avoid getting an overdraft or using your credit card because of a lack of cash.
3. Set yourself a realistic budget for presents and entertainment: be realistic with your budget and base it on what you can afford to spend, not on what you would like to spend on everyone. Use the budget planner on itsyourmoney.ie to help you work out how much you can afford to spend on gifts, socialising and other additional expenses that crop up around Christmas.
4. Use cash/laser where you can and your credit card sparingly: If you are going to use your credit card, think about how much you are spending on it first. It is easy to throw caution to the wind and splurge on expensive presents. However, your credit card bill must be repaid and interest can mount up quickly. Our credit-card cost comparison on itsyourmoney.ie shows that the annual rate of interest on credit cards currently varies from 8.5% to 17.9% so see if you can get a card with a lower interest rate or a no-interest introductory special offer.
5. Avoid loans with very high interest rates: During the busy Christmas period, people can really feel under pressure to spend more than they can afford. Moneylenders can be a convenient and flexible source of loans as they offer small loans over short period. However, borrowing from a moneylender can be expensive compared to other providers. People should check the full cost of any loan before they sign up for it.
The recent online poll on itsyourmoney.ie asked 1,858 people "Will you be borrowing money to pay for Christmas?" The results were as follows:
7% Yes I'll be applying for a loan
15% I'll use my credit card and repay it when I can
18% I'll use my credit card and pay it off in January
59% I have money set aside to pay for Christmas
