Millions face January financial woes after overspending at Christmas

A third of Britons spent more than they could afford, while one in 10 paid for shopping through credit

Christmas spending has led to January debt woes (Topical Press Agency/Getty Images)

Millions of Britons are facing a financial struggle this month after overspending at Christmas, according to research published today.

Almost one in three of us felt pressured to spend more than we could afford just before and over the festive period, while one in 10 people have fallen into debt, or further into existing debt, as a result of spending too much, according to the Money Advice Service.

The problems will be worsened by the fact that almost half of all workers were paid early in December. That means that more than 13 million people will have a longer wait until their payday this month. The net result is that millions will be feeling anxious, worried or even depressed throughout January.

The reliance on debt to make ends meet has climbed to a concerning level, official figures published on Monday suggest. Consumers borrowed more money in the run up to Christmas than in any month since February 2008 – the height of the credit crunch.

The Bank of England’s Money and Credit report for November reveals that the amount of cash being borrowed by consumers ahead of Christmas climbed by £1.5bn. The report shows that in November consumers owed a total of £178.2bn on credit cards and loans. The figures raise fresh concerns about a new and possibly unsustainable credit boom.

Peter Tutton, Head of Policy at StepChange Debt Charity, said: “With many households becoming more vulnerable to income shocks, this could result in a whole new group of people struggling with debt.

“We must not see a return to pre-recession levels of unmanageable debt and it is vital that creditors are lending responsibly to help prevent this.”

He urged the Government to ensure the right help is available for anyone who falls into financial difficulty.

Joanna Elson, chief executive of the Money Advice Trust, the charity that runs National Debtline, echoed the concerns. She said: “The figures confirm that we need to keep a watchful eye on the huge growth in consumer credit we are now seeing. Increased borrowing is to be expected in an economy that is recovering – but such steep rises in borrowing in recent months are a cause for concern.”

She warned that many households will not be able to handle the extra borrowing and that the charity is expecting an increase in debt problems early this year as a result. “Our research shows that nearly six million Britons are likely to fall behind on their finances this month, after a Christmas that more than one in three put on credit,” she said.

“Anyone struggling to cope with their credit commitments should seek free advice from a charity-run service as soon as possible.”

According to the Money Advice Service, the number of people seeking debt advice is expected to surge over the next three months. This time last year, the service assisted almost 2.6 million money and debt enquiries compared to the average month, where they handled 2.1 million.

Andy Webb of the Money Advice Service, said: “If you are struggling to survive financially this month, now is the time to act. There are simple things you can do to get your finances back on track.” He advised people who are struggling financially to look at all their regular spending at home and keep track of it throughout the month. “Doing this will help you see areas where you may be able to cut back, for example, cancelling unused subscriptions,” he said.

Alternatively you might be able to raise extra money by selling online items you don’t want or no longer use or even flog some unwanted gifts. Also, don’t underestimate how much you waste if you throw food away – plan your meals carefully and use up your leftovers.

The Money Advice Service has created a Survive January toolkit to give you checklists, tips and advice to get your finances back on track in January.

Go to moneyadviceservice.org.uk/survive-january for more information and to sign up for updates.