Aussies are tipped to spend beyond their means this Christmas, with credit cards and buy now, pay later services the preferred choice to make up for budget shortfalls, according to a recent survey.
According to CreditSmart, a quarter of surveyed respondents are expected to blow the budget by $500-$2,500, having a large impact on their finances in the new year.
Geri Cremin, credit reporting expert at CreditSmart, said “Christmas is a wonderful time of celebration, but too many people succumb to the pressure to overspend at this time of year.”
The poll also asked Australians what they plan to spend the most money on. Half said they would spend the most on gifts as their number one holiday-related expenditure, followed by food and drinks (44 per cent), entertainment (29 per cent) and shopping for themselves (26 per cent).
Ms Cremin believes consumers can be persuaded to spend more than they intend, especially during Christmas.
“Peer pressure from social media, online promotions and easy availability of credit have led consumers to spend more each year than they would normally do, especially during the festive season, which may hurt their hip pocket.”
Most popular credit choices
According to CreditSmart research, credit cards still remain the most popular choice for consumers, with over 40 per cent of consumers saying they will spend on their plastic if they need credit this Christmas.
Buy now, pay later followed as the second most popular choice, with 20 per cent of people saying they would use this service this Christmas if they needed credit.
“There are lots of promotional credit offers made available in the lead-up to Christmas, from extended interest-free periods on credit cards, to retailers and brands offering special buy now, pay later discounts to allow consumers to buy more,” Ms Cremin said.
She warned, however, that consumers must remember that buy now, pay later is a credit product just like any other loan and will take repayments from your regular bank accounts that you use to pay other utility bills such as rent, electricity and groceries.
Finally, the report found that not everyone has caught up with last year’s repayments, with 4 per cent of respondents admitting they are paying off Christmas debts from last year.
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