One in four Brits are relying on credit cards to fund Christmas this year

Credit cards are funding Christmas this year (photo: Unsplash)Credit cards are funding Christmas this year (photo: Unsplash)
Credit cards are funding Christmas this year (photo: Unsplash)
Christmas is a time when many families struggle, but particularly now in the face of the cost of living crisis.

It is always a struggle and juggling act finding out where to buy the best presents without breaking the bank to how to afford rising energy bills to how to put food on the Christmas table at the same time.

The countdown is on for Christmas, but just how exactly are people funding it this year?

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A new survey from credit management company Lowell ( website) has compared Brits' spending habits for Christmas 2021 and 2022, to determine a year on year comparison during the cost-of-living crisis, the start of a recession and a pandemic.

Counting the cost of Christmas (photo: Unsplash)Counting the cost of Christmas (photo: Unsplash)
Counting the cost of Christmas (photo: Unsplash)

One in four Brits (25 per cent) will be relying on credit cards to fund Christmas, a 47 per cent increase since last year.

Despite the rising cost of living, 55 per cent more Brits are feeling the pressure to overspend compared to 2021.

A quarter of Brits (25 per cent) worry they won’t be able to afford to heat their homes this December.

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As we enter December, preparations are well underway for the festivities, but how are people in the UK coping financially with the cost-of-living strain?

Following on from their 2021 report, credit management company Lowell has conducted further research into the impact Christmas will have on UK household finances, compared to 2021.

Last year, the average British adult spent £548 on presents alone. With 55 per cent more Brits feeling the pressure to buy extra this year, it could be questioned if these figures can be funded again in 2022.

Currently, 34 per cent of people in the UK anticipate that they will buy more than they need, a 55 per cent increase since 2021. More than a quarter (28 per cent) expect to spend beyond their budget, and 18 per cent feel under pressure to buy more expensive luxury items despite inflating costs.

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The impact of social media is also adding a strain to people’s buying habits, with 15 per cent more Brits overstretching themselves financially to buy premium brands compared to last year. Plus, one in 10 (ten per cent) admit to feeling pressure from Facebook, Instagram and TikTok to keep up with new trends.

Whilst Christmas is a wonderful time of year, it can be a financial worry for many, with a quarter (25 per cent) of Brits claiming they are having to cut back as much spending as possible due to the cost of living crisis. Furthermore, 25 per cent of people are concerned that they won’t be able to heat their homes amid rising energy bills, and 14 per cent will be putting up fewer Christmas lights as a way to keep costs down.

This year, there has been a 47 per cent increase in credit cards being used as the main funding source for Christmas. More than half (51 per cent) will dip into savings, and one in ten (12 per cent) are opting for Buy Now Pay Later schemes. Encouragingly, 40 per cent more Brits are going to rely on their disposable income, instead of outsourcing other finances.

Whilst credit can provide the flexibility to spread the cost of larger purchases, it must be used responsibly. With spiralling interest rates increasing the cost of borrowing, those unable to pay off the debt in full could be left struggling if an unexpected expense occurs in the New Year.

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Almost one in five (18 per cent) Brits believe their debt might reach at least £600 this year, not including any late fees or additional interest accrued on balances carried past the due date. Furthermore, 17 per cent of people in the UK predict it will take until Easter next year to pay off their Christmas debt, that’s a third of the year paying back what was spent over the festive period.

With the annual percentage rate (APR) on UK credit cards reaching an all-time high this year, it could be easy to be left with even more money worries post-Christmas.

For example, using just the monthly minimum payment of £30 to pay off £600 in credit card debt (with an average APR of 21.8 per cent, and no further spending on the card) could take over two years to repay, with an interest cost of £135.

John Pears, UK Managing Director of Lowell UK said “At Lowell, we understand that with so many financial outgoings Christmas can be an expensive time for many people.

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The cost-of-living crisis is having a huge impact on many households – and we fear this will get worse if people feel under pressure to overspend during the festive period.

Our report shows an increase in the number of people intending to use credit to fund Christmas. This can cause an increase in household debt that can become difficult to manage.

We’d like to remind anyone feeling financial pressure to reach out for support, and a list of organisations who can help can be seen at website.”

For more information about the findings and advice on how to manage finances over Christmas, visit our blog website.

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Lowell is one of Europe’s largest credit management companies with a mission to make credit work better for all.

It operates in the UK, Germany, Austria, Switzerland, Denmark, Norway, Finland and Sweden. Lowell’s unparalleled combination of data analytics insight and robust risk management provides clients with expert solutions in debt purchasing, third party collections and business process outsourcing.

For more information on Lowell, visit the company’s customer website at or the investor website.

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