Every year, thousands of Australian shoppers choose to put their Christmas expenses on their credit card and end up with debt well into the new year.
According to finder.com.au, Australians are expected to spend $8.3 billion on Christmas presents this year, with an average of $488 spent per adult. According to the Christmas Shopping Survey, most Australians are aiming to stick to a budget with 61% of respondents planning to spend less than $500 on Christmas presents and 27% plan to spend between $500-$1000. However, 12% of respondents will spend more than $1000 on Christmas presents and 3% plan to spend more than $2000.
Some people may need to reign in some of their Christmas spending and take control of their expenses if this is more than they can afford. Even though you may get swept up into the giving spirit this time of year, is it worth having months of debt to pay off afterwards?
Many shoppers turn towards their credit card to help pay for gifts. However, using a credit card can be dangerous as you may end up spending more than you can afford. Last December, Australians spend more than $25.66 billion, which was $2.41 billion more than November. Creditcardfinder.com.au estimates that shoppers will spend even more this year with a massive $26.68 billion expected for December.
Using your credit card for Christmas spending does not have to be dangerous, you just need to plan ahead. Plan a budget before you start spending and make sure you keep all of your receipts. You will also need to factor in how much extra you will be paying in credit card surcharges and interest.
One option that can help keep a lid on your spending is interest free days on your credit card. According to Mozo, out of the 200 credit cards currently on the market, 90% have interest free days from 40 - 62 days. When used wisely, it can help reduce your financial stress during Christmas and give you time to pay off the extra expenses without having to pay interest.
However, you need to keep track of these interest free days and give yourself plenty of time to repay your debt before the interest free period runs out. It is also important to read the fine print as some credit card providers will have a minimum repayment amount, even during the interest free period.
Many Australians get swept up in the hype of giving during the festive season, but with a little research, you can find something that your loved ones will love without creating a hole in your wallet.