How are you paying for Christmas?

pay for Christmas

As part of Money for Life’s #12SavesofXmas, Andy Webb from Be Clever With Your Cash has taken a look at some of the most common ways people pay for Christmas, so you can tell the naughty from the nice.

December is expensive. There’s gifts to find, parties to attend, trains to catch and food, oh so much food, to buy. But how you pay for it could be the difference between a miserable January sat at home with no money, or having enough cash to start the new year positively.

Your savings

Right. This is the obvious one isn’t it? And you’re probably thinking “What savings?”. Well whatever the level of your bank balance, the cold hard truth is this is how much you have to spend on Christmas. And not just Christmas, but all your day to day expenses.

But it doesn’t mean you can’t have a great Christmas. Get creative with gift ideas, prioritise what you want to do, and most importantly think about how much better next year will be without debts!

Plus there are a few ways to boost your Christmas budget without you having to resort to expensive borrowing. Give these a try:

  • See if there’s anything you can sell
  • Switch bank for a cash bonus
  • Compare prices for EVERYTHING you buy
  • Book any train travel in advance. The earlier the better, but even the day before should be cheaper

Credit cards

If you’ve got some plastic in your wallet, the temptation is to just whack any extra spending on there and deal with it later.

Now, they can be useful if you are able to clear what you spend in full each month, with bonuses like extra consumer protection or cashback. You might be able to get a 0% interest purchase credit card (different to a 0% balance transfer card) to spread the cost of something over a year or more – just make sure you’ve a plan to clear the debt.

But if you know you can’t afford to use a card then it’s better to leave them at home. The only exception is if you really need to borrow, in which case it’ll be cheaper than short term loans.


It’s easy to forget your overdraft is a loan from your bank. So unless you have an interest-free overdraft, every time you dip into one it’ll cost you money.

It’s worth asking your bank if they can offer you a 0% overdraft, or extend an existing one – if you go over the limit for an approved overdraft (usually called an “arranged” overdraft), then you could be hit with some very expensive charges on top of the interest.

Payday and doorstep loans

A payday loan can be really expensive. Say you borrow £100 for two months – it could easily cost you £48 in interest. And if you miss a payment there can be charges on top. Often people get caught out and are unable to repay the high rates of interest on top of the money borrowed.  Avoid doorstep loans, logbook loans and loan sharks too.

Rent to own

Another one to steer well clear of. You might be tempted to pay for expensive gifts week by week through an in store credit agreement. You basically rent it each week with a small payment until you’ve cleared the cost PLUS interest. And it’s ridiculously expensive.

Buy a Nintendo Switch console bundle in a normal shop and it’ll cost you around £300. But buy it at retailers such as BrightHouse and it can end up costing you almost £950!

Not sure how much Christmas will cost? Try the Money Advice Service’s Christmas Money Planner

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