Right here’s the way to keep away from post-Christmas debt after Brits hit with £1.1bn bank card invoice

[ad_1] The turkey, the journey, the presents - and the invoice.

As households gear up for Christmas, extra consumers are turning to bank cards and ‘purchase now, pay later’ schemes to make ends meet.

With borrowing prices at their highest in years, this might be one of the crucial costly Christmases but.

Right here, we take a look at how festive credit score is hitting tougher - and the way to cease short-term borrowing turning into a long-term downside.

Bank cards: comfort at a price

Bank card borrowing is getting pricier. In response to Finder, the common UK bank card APR in October 2025 was 36.34 per cent, up from 35.8 per cent a 12 months earlier. Moneyfacts places the common buy APR at 35.7 per cent, among the many highest on report.

Meaning anybody who borrows £1,000 and takes a 12 months to repay might face roughly £350 in curiosity alone.

The Financial institution of England says customers added £1.1 billion in bank card debt in January 2025 - proof that whilst inflation eases, reliance on borrowing stays excessive.

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(Getty Photos) Minimal funds might look innocent however can hold balances lingering for years. Lacking only one fee also can add charges and injury your credit score rating, leaving a monetary hangover as soon as the festivities finish.

BNPL: sensible budgeting instrument or debt entice?

‘Purchase now pay later’ (BNPL) has change into the go-to for hundreds of thousands. Round 42 per cent of UK adults have used it, and transaction values are anticipated to succeed in £27bn this 12 months, in accordance with Finder and The Cost Affiliation.

Companies similar to Klarna, Clearpay and PayPal let customers break up funds into three or 4 interest-free instalments.

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Used fastidiously, that flexibility may help individuals handle money move - however be rigorous about making the funds on time.

Anthony Fuller, chartered monetary planner at Path Monetary, says: “For disciplined individuals, BNPL is a instrument to assist break up funds over a number of months moderately than paying one lump sum for one thing.

“It may be helpful if precisely what you’re spending and when and the way you'll repay it. It will possibly keep away from excessive bank card rates of interest.”

However specialists warn towards treating BNPL as free cash. It’s not designed for long-term borrowing - and when a number of plans overlap, missed instalments or late charges can shortly flip a manageable expense into an issue.

Fuller provides: “It’s solely actually a good suggestion for organised and well-disciplined individuals who aren’t going to get right into a cycle of debt.”

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(Getty/iStock) Residents Recommendation discovered that round one in 5 BNPL customers have missed or made a late fee, whereas practically a 3rd of these with instalments due needed to borrow, in the reduction of on necessities or fell behind on different payments. Its advisers at the moment are serving to greater than twice as many individuals with BNPL-related points as they did two years in the past, with most circumstances involving compensation issues.

Why festive borrowing bites tougher

The issue with BNPL isn’t one buy - it’s repetition.

With presents, journey and meals prices rising, consumers typically layer one BNPL plan on prime of one other, whereas additionally counting on bank cards to bridge gaps. When repayments all fall due in January, the squeeze will be extreme.

Even small delays add up: paying late on a BNPL plan can set off charges, whereas leaving a stability on a high-APR card might imply tons of in curiosity.

The Monetary Conduct Authority has warned that unregulated BNPL agreements “carry a threat of great shopper detriment” when not used responsibly.

Safer methods to unfold the associated fee

Fortunately, there are methods to make use of credit score extra safely with out giving up the festive spirit:

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(Getty Photos) Use BNPL for short-term purchases solely. Stick with compensation plans of three months or much less and be sure you can cowl the instalments comfortably out of your subsequent few pay cycles.Keep away from stacking a number of BNPL accounts. If you have already got multiple plan operating, checklist the fee dates to keep away from lacking any. Repay bank cards shortly. Purpose to clear the stability every month or as quickly as doable. Even a small improve in month-to-month repayments can save tons of in curiosity.Set a festive price range. Add up the whole lot - presents, meals, journey - and cap spending at what you may repay inside three months. Construct a buffer. When you can, transfer leftover November or December pay right into a financial savings pot to melt the shock of January payments. In brief, it’s important to be organised in case you’re utilizing credit score to pay for some issues in a brief interval.

Don’t let “purchase now” imply pay ceaselessly

Quick-term credit score generally is a sensible technique to handle Christmas prices, particularly if it helps keep away from high-interest borrowing. However the important thing, specialists say, is to make use of it with a plan.

BNPL generally is a sensible budgeting instrument; it turns into an issue solely when it turns right into a rolling cycle of delayed funds.

As Fuller places it: “It’s a short-term planning technique for splitting huge funds into three elements however shouldn’t be the beginning of a 12-month post-Christmas debt hangover.”

With bank card charges close to two-decade highs and family budgets nonetheless tight, the perfect present this festive season would possibly merely be a transparent plan – and a brand new 12 months free from debt.