Consumers that overspent this Christmas might be facing a financial headache right now. Whilst using an overdraft is a convenient way to tide borrowers over until pay day, the cost to do so can be much more expensive than other forms of borrowing.

According to the latest research by moneyfacts.co.uk, the cost of the convenience of using an overdraft or a credit card can bite in a period of just three months, and with January sales looming, some consumers may be waiting until late February before they get back in the black.

Rachel Springall, Finance Expert at moneyfacts.co.uk, said:

“Some borrowers may decide to just go with the flow this year and spend their cash on whatever they desire to make the most of Christmas. The joy of being surrounded by goodies may be a fleeting feeling though, as the cost to borrow can soon wipe out any festive cheer.

“It’s important that shoppers refrain from going on a wild spending spree and instead be a bit more mindful of how a splurge can create a debt hangover. It is entirely possible that even a £300 debt could cost dearly, particularly if borrowers are using their unarranged overdraft.

“It could be worthwhile for borrowers to take a step back and revisit their everyday spending if they find that they are dipping into their overdraft more often than not. Contactless payment technology is allowing shoppers to spend their cash more easily, but it could also have consequences on the amount people are spending. Taking time out to budget the monthly spend and keeping an eye on inessential purchases is a good starting block for a healthier bank balance.

“Using any free time to peruse the latest interest-free credit cards to spread any costs is a good idea as it can give borrowers some time to repay the debt. However, shoppers should refrain from paying just the minimum amount required on a credit card and instead pay over this by a fixed amount so that they can reduce the debt faster.”

For further information please click here

www.moneyfacts.co.uk - The Money Search Engine

Moneyfacts.co.uk is the UK's leading independent provider of personal finance information. For the last 20 years, Moneyfacts' information has been the key driver behind many personal finance decisions, from the Treasury to the high street.

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