Christmas Debt: The true cost of Christmas

Christmas is, as they say, the 'most wonderful time of the year.' It's the season of peace and goodwill, seeing family, and enjoying special time with loved ones.

But Christmas can also bring financial pressure, as well as mental or emotional strain. Between presents, Christmas dinners, decorations and more, it can all quickly add up to become a very expensive, and stressful, time of year.

How much does Christmas really cost?

At Lowell, we know that our customers sometimes struggle around the holidays, and we don't want to see anyone overspending due to Christmas pressure.

We conducted research[1] into how much debt people get into because of Christmas, and how long it might take to pay it off.

Our survey found that: 

  • The average person in the UK gets into £439 of debt over Christmas
  • It takes the average person 4 months to get their finances back into shape after the festive season

There's also proof that Christmas causes us to spend more. The Bank of England found that a typical household in the UK spends just over £2,500 per month[2]. But in the run-up to Christmas, our spending habits change. We spend, on average, almost £740 more in December (29% more than in a typical month!)

Christmas Pressures

Part of the reason for the overspend in December is the feeling of pressure around Christmas. There are advertisements, TV shows, and magazines, all encouraging you to buy more at Christmas. And that's not to mention social pressure - seeing what other people around you are doing and feeling the pressure to 'keep up' by creating the 'perfect Christmas' for your own family.

Many of us want to treat our loved ones to an extra-special Christmas, with plenty of presents and treats, but it's really important to remember that the pressure to buy too much can cause financial difficulties.

This is not just in relation to presents. Of the people we asked, 22% felt pressure to buy more than what's needed when shopping for Christmas presents and food.

With supermarkets pitching a full-on Christmas dinner (complete with all the trimmings) as the secret to a perfect Christmas, some families might feel like they need to over-buy or push the boat out on luxury and premium items that they wouldn't normally buy. In fact:

  • 13% of Brits feel pressured to buy more premium brands when shopping for Christmas presents and food
  • More than 1 in 5 Brits feel pressured to overspend on what they can afford when shopping (21%)
  • 14% of Brits feel pressured to buy large-expense items
  • 10% (of the people we surveyed) said they feel pressure from social media to keep up with trends when they're doing their Christmas shopping

We all want to make Christmas special, and the encouragement to spend, spend, spend from the media doesn't make it easy around this time of year.

But, it's really important to keep things in perspective. Overspending can lead to financial difficulties - depending on how you're funding Christmas - and you absolutely do not need to spend money that you don't have to show friends and family how much you love them.

How Brits fund Christmas

As we've established, Christmas can be expensive - so it's not too surprising that lots of Brits fund Christmas through other means than just their November wages.

While just over a third (35%) of Brits fund Christmas through disposable income, it's not quite as simple as that for everyone. 39% of Brits dip into their savings to afford Christmas - but if building savings is difficult, many people find themselves turning to credit-based options, and wracking up debt.

Our survey found that:

  • Almost 1 in 5 Brits (17%) fund Christmas through credit cards
  • A further 11% will use 'Buy Now, Pay Later' options[3]
  • 10% fund Christmas through pre-purchase schemes (such as pay-monthly catalogues
  • 9% dip into an overdraft facility to pay for Christmas

Although relying on credit is tempting, it's important to remember that if you're unable to keep up with the scheduled repayments, it could have an impact on your credit score. For more information, check out our guide to understanding and improving your credit score. 

Lots of people use these methods because they have very little disposable income, and find it hard to build up savings or create a budget they can stick to.  If you're worried about Christmas and would like some help working out a budget, check out our free and handy budget calculator. It doesn't take long to fill out, and it might help you understand your incomings and outgoings better.

The true meaning of Christmas

Above all, remember that Christmas is just one day. And while it's a special day, it's far more important to spend quality time with the important people in your life than it is to spend lots of money on Christmas presents or fancy decorations.

Your loved ones would not want you to potentially face additional debts or financial hardship in the new year, and here at Lowell, we wouldn't want that for our customers, either.

If you're a Lowell customer, and you're feeling worried about debts at Christmas, contact us and let us know you're going through a difficult time. 

For more handy tips, ideas, and information on how to manage your finances at any time of year, check out the Lowell blog.



Published by Libby Davies on 6th December, 2021


[1] – Survey conducted by Censuswide on behalf of Lowell, 17.11.2021 - 19.11.2021

 1,000 general respondents in the UK

[2] – Bank of England

[3] – Finder