Avoid the festive debt trap this Christmas
Christmas money and debt tips from Citizens Advice Wirral
The festive period can be a very expensive time, with increased food and energy bills and buying presents for loved ones. Knowing where to go to get the right help can be tricky too.
If you’re struggling to balance your budget this Christmas, Citizens Advice Wirral can help.
Energy and debt advice
As households feel the strain on their budgets, CAW have seen an increase in the number of people with energy debt issues.
If you’re struggling with energy debt, the main message is to get help early and don't let these debts spiral out of control. The organisation has advisors who give specialist advice and cost-of-living support before it becomes an issue.
Some tips from CAW advisors are:
- Keep track of your money with a spending diary
- If you have a credit card, check if you can switch to a 0% credit card (if applicable)
- Work within a budget - advice on how to plan your budget is available on the Money Helper and MoneySavingExpert websites.
- Look at your outgoings and check comparison sites for cheaper energy deals
- Speak to your Utility providers to check you are on the best tariff
- Do a benefit check on the Citizens Advice website to ensure you are getting all relevant benefits
Buy now pay later
More than a quarter of UK adults say they are likely to use buy-now-pay-later (BNPL) to help ease spending over the festive period.
Many people use buy now, pay later (BNPL) services like Klarna, Clearpay and Laybuy for online and in-store shopping, which can provide fast and affordable credit. However, research shows that many users are unaware of potential late repayment fees and negative marks on their credit reports.
Citizens Advice has seen a 67% increase in people seeking help with BNPL debt in the last 12 months.
MoneySavingExpert (MSE) recommends you ask yourself these three questions before lending through BNPL:
- Would I have bought this item in the first place if BNPL wasn't an option?
- Am I sure I can meet the repayments?
- Is BNPL the best form of borrowing out there for me? See Buy now, pay later vs 0% credit cards vs 0% overdrafts for help answering this.
If the response to any of these questions is 'no', then both MSE and CAW advise that you should avoid using BNPL at present.
This informative guide by the MoneySavingExpert (MSE) explains how buy now, pay later schemes work and highlights key considerations for their customers.
Loan Sharks
Unfortunately, some people will fall victim to loan sharks in order to make their festive purchases this Christmas.
Some red flags to be aware of for a loan shark are:
- A loan is offered/given with no questions asked
- There is no paperwork or receipts
- Huge amounts of interest are added
- Threats are made to you and your family
- You are forced to hand over valuables as security
Loan sharks can often take other illegal action to collect the money they've lent out, such as threatening violence and taking credit cards.
If you think a money lender is operating illegally you can speak in confidence to the Stop Loan Sharks Hotline by calling 0300 555 2222 or you can email reportaloanshark@stoploansharks.gov.uk.
For more information please visit the Stop Loan Sharks website.
Credit Unions
Many residents find Credit Unions to be a great way to save, bank and borrow. Members pool their savings to provide each other with credit at a low interest rate, which is usually much cheaper than other credit providers and significantly cheaper and safer than using illegal loan sharks.
Wirral Credit Union has branches in Birkenhead and Wallasey. The Find Your Credit Union website can also help you to find credit unions based outside of the borough that you may be eligible to join.
For more advice and information, you can sign up to CAW’s monthly cost-of-living newsletter and visit their website here.
