We Wish You A Merry Christmas...And A Debt-Free New Year

It makes sense to plan ahead for Christmas, then the financial plan may be reduced.

You might think it's a long way off, as you admire your holiday tan and throw another burger on the barbecue. But there are only about 130 shopping days left till Christmas.

Yes, that means it's only about five pay cheques away, so now could be a good time to start thinking how you're going to pay for it all. Because according to a survey from Britannia Building Society, each and every one of us plans to spend an average of around £620 this Christmas. Make that £840 if you've got children. Or £2000 if you're one of the 5% of those surveyed, who likes to be particularly generous.

The survey also shows that nearly half of the population is not currently planning to save up for the expenses of the festive season. This means that quite a lot of us will be dreading January, as we await the thump on the mat of a hefty credit card bill from the month before. It also means a few weeks of misery too, when you can't afford to do very much till you get your first pay cheque of the New Year.

Then life will go back to normal -- if you clear all your Christmas debt at once, that is. If you've taken out a loan, or are paying it back on your credit card a bit at a time, the Christmas debt hangover is going to be giving you a headache for quite a while longer. Especially if you're one of the 4% who expect to take 11 months or more to pay it all off.

The Christmas debt hangover cure

Here's a sobering fact: deciding to pay off only the minimum credit card payments on your Christmas expenditure could take you more than 16 years to clear the debt, at a cost of around £740 in interest alone. Just think what you could spend that on instead.

Paying for Christmas doesn't have to be painful though. It might be hard to think about tinsel and turkeys right now, but if you save in advance of the festive season, instead of putting it on your credit card, it could make all the difference. For example, if you started putting away just £124 per month from now, you'd have enough to pay for it all in December.

And if you want to open a new savings account to save up for Christmas, there are lots on the market that could be ideal. One that's worth checking out is the Sainsbury's Bank Internet Saver which pays an annual rate of 6.25% AER. The Icesave Savings Account is also attractive and pays out 6.2% AER. These both pay interest monthly.

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