Citizens Advice tips for avoiding Christmas debt

Now that Christmas shopping is in full swing Citizens Advice has issued some simple guidelines to help people avoid getting into debt at Christmas:

• make a list of who you need to buy presents for and set a limit according to your budget on how much you can spend;
• try to avoid going over your budget.  Shop around for the best deals and try to avoid buying on impulse;
• if you can afford to pay for something outright then do it. But if you cannot avoid borrowing use the creditor with the lowest interest rate;
• be aware that using credit cards can be very expensive, but remember that using a credit card can offer additional protection against faulty goods or retailers going bust, on purchases over £100.  If you are buying an item costing more than £100 and use your credit card to pay even £1 of deposit on it you will still be protected;
• avoid store cards where possible. Retailers may try to entice you by offering an immediate discount if you take one out, but the interest rates are generally very high;
• read the small print.  Check for hidden extras in any credit agreement. Work out the total amount payable. Ensure that the monthly installments are within your budget before signing. Interest free credit can seem attractive, but if you don’t pay on time, or miss a payment, you could have to pay a lot more;
• be careful with gift vouchers. If buying them make sure you choose a reputable company - if the company goes bust the vouchers will be useless;
• don’t bank on an overdraft.  If you do need more money, don’t just run up an overdraft without talking to your bank first – it will work out much more expensive;
• if you have to use credit try and pay the maximum amount possible when the bills come in;
• don’t forget the everyday bills.  Remember that rent, mortgage, utility and rates bills still have to be paid and the consequences can be severe if they’re not.
 
If you get into financial difficulties or find you have overspent follow these tips:

• don’t panic and don’t ignore the problem – it can seem tempting to ignore bills and threatening letters but they won’t go away;
• avoid borrowing further to try and pay off existing debt – this may lead to more problems in the long run;
• talk to your creditors – don’t just stop payments without explaining why.  They can sometimes be more understanding than you might expect;
• work out priority debts, for example, rent and utility debts – pay these first.  Don’t fall into the trap of paying whoever shouts loudest first;
• work out a budget that covers all your income and essential outgoings.  Only offer to pay off debts at a rate you can keep up – it is easy to be panicked into offering more than you can afford;
• think twice about paying for debt advice – CAB has outlets right across Northern Ireland and many years of experience helping with debt problems and negotiating with creditors.

To download a copy of the CAB top tips for avoiding Christmas debt click here.