UK householders issued £593 credit card warning for Christmas shopping season

UK householders have been issued with a warning if they plan to use credit cards to spread the cost of Christmas. Many people will be using their cards to treat themselves, their children, and their families over the festive period.

It's one way of dealing with the financial constraints of the cost of living crisis so you don't see an immediate hole in your bank account but can gradually repay everything that's been spent on gifts, food, drinks, socialising and other seasonal expenses.

But finance experts say people must be careful, or they could be left with a financial hangover that will last well into 2025. December is arguably the most expensive time of year, with last year's average Christmas spending at £625.57.

This year's projections suggest a decrease to £593.90, as many consumers continue to grapple with living costs. Despite tightening budgets, millions are looking to spread the cost of Christmas on a new credit card or by 'maxing out' their existing cards.

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New research has revealed that nearly half (48 per cent) of Brits plan to use their credit cards to fund the festive period. However, they urge consumers to be cautious when it comes to flashing the plastic.

Lexi Burgess, a personal finance expert at CredAbility, a free credit score app, explained: "Used wisely, credit cards can offer benefits like cashback and air miles. But managing your spending is key, or you could be left facing a financial hangover that stretches well into 2025."

Lexi outlined several dos and don'ts for credit card spending over the festive season so you can keep control of your household cash and not plunge yourself into heavy debt.

Do

Set a budget

It’s all too easy to get swept up in the holiday spirit and overspend. That's why setting a budget is so important. Before the festive frenzy kicks in, sit down and outline how much you realistically want to spend.

Think about gifts, food, and any activities you have planned. Once you have your budget, try to stick to it. When you go shopping, it can be tempting to splurge on things that catch your eye but remember: a credit limit is not a spending target.

Pay the monthly balance or at least the minimum

If you can, aim to pay off your entire credit card balance each month. Doing this will keep your debt in check and show lenders you can use credit responsibly. This can positively impact your credit score, making it easier for you to get loans or mortgages in the future.

If you can't pay off the full amount, at least make sure you cover the minimum payment. Falling behind can lead to fees and high interest charges.

Look at the rewards you can earn

Using a credit card can be a savvy way to earn rewards, especially during the busy holiday shopping season. Many cards offer fantastic perks like cashback or air miles for every pound spent.

Take a close look at the different cards available that might suit you, including supermarket credit cards that can offer points or discounts on groceries. Just remember to check for any hidden fees or annual charges that come with these reward programs.

Don't

Leave it until the last minute

If you're thinking of applying for a new credit card to help with your Christmas expenses, don’t wait until the last minute. Now (early November) is prime time for credit card applications ahead of Christmas.

Once you submit your application, keep in mind that it can take around 10 working days for the card to arrive - sometimes even longer during the busy holiday season. By getting your application in early, you give yourself ample time to plan and budget your holiday spending effectively.

Waiting until December could leave you with fewer options and, worst-case scenario, even a declined application if lenders tighten their approval criteria as Christmas approaches.

Forget about fees

While credit cards can be handy for managing holiday expenses, it's important to keep an eye on fees. Some cards offer enticing zero per cent interest rates for several months, which can help you spread out payments without the burden of high interest.

However, transfer fees, which can vary between 0 per cent and 2 per cent, can impact your overall savings. Weighing them against the length of the interest-free period will help you determine the best deal for your needs.

Take risks

Stick to reputable websites to avoid scams that often pop up during the holiday season. Scammers know that people are eager to snag a great deal, so be cautious and double-check the legitimacy of any site before entering your payment details.

While credit card purchases between £100 and £30,000 are protected under Section 75 of the Consumer Credit Act - meaning you can claim a refund if something goes wrong, like receiving a damaged item or none at all - it's still best to avoid the risk in the first place.

Lexi added: "Before applying, check your credit score and only apply for cards you’re likely to be approved for. A declined application can hurt your credit score, so be strategic. If you are turned down, it's best practice to wait at least six months before your next credit card application. Applying for multiple cards in a short space of time can temporarily damage your credit score."

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