Where in the UK has the worst festive debts?

Shopping online with credit card

We spent an astonishing £21 billion on Christmas presents this year - the majority of it on credit cards. In fact, 76% of all presents were bought using credit cards. Unsurprisingly, as a result, we have racked up shocking debts of £15.5 billion, and we will take more than a month to pay it back.

See also: New Year's Resolutions for 2017 to transform your finances

See also: Will Christmas spending ruin your relationship?

Research from AXA Insurance found that festive shoppers in Brighton have run up the worst debts, with an average of £438.13 each. They are followed by shoppers in Cardiff, Newcastle and Leeds.

Top ten credit card debts

Brighton £438.13
Cardiff £330.60
Newcastle £276.81
Leeds £273.94
Plymouth £264.00
Southampton £263.30
Manchester £254.42
London £251.09
Birmingham £248.84
Sheffield £244.00

In some cases, shoppers planned in advance for this. They will have signed up to a card with a 0% introductory period on purchases, and will be planning to pay back everything before they are stung with any interest.

In most instances, unfortunately, they will have simply put the shopping on their existing card in the hope that they will be able to pay it all back on the date payment is due - and thereby avoid interest.

Unfortunately, the majority of them will fail.

How long to pay?

The survey revealed that on average, only shoppers in Sheffield pay their credit card bills in less than four weeks (3.9), and in some areas, the average period it takes to repay is more than six weeks.

The areas taking longest to repay
Belfast 6.5 weeks
Nottingham 5.3 weeks
Liverpool 5.3 weeks
Southampton 5.2 weeks
Manchester 5 weeks
Birmingham 4.9 weeks
Bristol 4.9 weeks
Leeds 4.9 weeks
Plymouth 4.9 weeks
Cardiff 4.8 weeks

Families have more trouble with festive debt than most. The survey found that while the average Brit takes 4.8 weeks to pay back their festive debt, this rises to 5.5 weeks for those who spend most of their money on gifts for children.

It's also worth bearing in mind that the are the averages, and that there are plenty of people who will carry incredible amounts of debt into the New Year, and won't be able to pay it back for months.

A separate study by uSwitch found that just over half of people think they will still be paying for this Christmas when next Christmas comes around. It's hardly surprising, therefore, that 65% of them are worried about their levels of debt.

What can you do?

The AXA study found that almost half of us have made a financial New Year's resolution. The most common resolution is to spend less in general (19%), followed by keeping an eye on their money (18%), and spending less on non-essential items (16%).

But while these are admirable resolutions, we need to be more specific if we are to get back on top of our finances and repay our debts.

This means establishing a budget - and factoring sensible debt repayments into that budget. We need to examine what we are earning, what we are spending, and how we can make the two sides of the budget balance.

If we are paying interest on debts, it's also essential to see whether there is a way of reducing that interest while we repay what we owe - whether that's by moving credit cards, or considering a loan. This cannot be seen as an excuse for borrowing even more money, but a helping hand in reducing interest payments and making the budget balance.

Finally, once the debts are repaid, the sums being put into repayments shouldn't simply be diverted into spending. They should be siphoned off into a savings account, so that when next Christmas rolls around, we will actually be able to buy presents without resorting to plastic.

Most common causes of debt
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Most common causes of debt

There are some very common reasons for building up problem debts. Here we reveal seven of the most common, and what you can do if you face them.

Unemployment or illness that means one or more of the household’s earners are unable to work will bring a profound change in family finances, and according to the Money Advice Service is the most common reason for getting into problem debt.

If your circumstances change, therefore, you need to immediately address your family finances, and put everything on a minimum spend lockdown. You should also look into the benefits and tax credits that are available sooner rather than later, to try to close the gap.

If you are on the kind of contract that means varying hours, it can be incredibly difficult to work out what you can afford to spend - making it the second most common reason for getting into debt - according to the Debt Support Trust.

Rather than swinging through the extremes from week to week, the best approach is to establish a budget that will work in the leanest of months, so you don't find yourself getting used to the months when you work more hours.

According to Citizens Advice, trying to service too much debt is the third most common reason for getting into difficulties. The TUC found that those with problem debts spend 40% of their income on debt repayments.

If you are in this position, you officially need some help with your debt problems. If you continue to rob Peter to pay Paul, you will end up owing more and more, so you need to take stock and talk to a debt charity about all your options.

The double-whammy of the legal bills combined with the incredible cost of establishing two separate households is enough to make divorce or separation the fourth most common reason for going into debt - according to the Debt Support Trust.

There's no easy solution, but if you are going through this, it can be helpful to talk through your financial situation with someone you trust or a debt charity, who can help you balance a stretched budget.

Problem debts aren’t necessarily caused by a sudden shock to the system. According to the Money Advice Service, 20% of their clients are simply trying to live on an unsustainably low income.

If you are in this category, it’s important to seek help on the benefits and tax credits you may be able to receive. It’s not always easy to navigate the system, but charities like StepChange have experts on the benefits system who can talk you through what’s available.

The combination of rising costs and stagnating wages over the last few years has meant increasingly people saw their monthly wage cover less and less of their monthly outgoings. This position has started to ease more recently, but has left many people far worse off than before the financial crisis. The Money Advice Trust said a combination of this and unexpected costs was responsible for almost one in ten problem debts.

If you consistently spend more than you are expecting, it's well worth keeping a spending diary. That way you can establish the real cost of living, and start to identify where you can cut costs.

The Money Advice Service says it commonly deals with individuals who have struggled to get to grips with budgeting and debts, and have got into debt because they don’t have the skills and knowledge to manage their money effectively.


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