There is no doubt that Christmas is an expensive time and it can very be tempting to overspend. In fact, statistics have shown that in the Christmas of 2017 that almost six in ten households made significant financial sacrifices in order to pay for Christmas gifts for their friends and family. It is not uncommon for people to overspend on their credit cards and not be able to pay back the full amount of the loan for months on end, for people to delay their obligations such as their utility bills or insurance payments and also many people choose to take out loans in order to fund Christmas.
If someone takes out a loan to fund Christmas, in most cases, it will be a payday loan. A payday loan is a short term loans for bad credit which is usually transferred into your bank account within the 24 hours. As the name lends itself, you will have to pay back the loan when you get your next pay cheque plus the interest agreed. However, many people find themselves in a position after Christmas where they cannot pay back the loan as they underestimated how much they would have to spend on gifts, travel and food.
How to avoid using payday loans for Christmas?
Budgeting
One of the most powerful things you can do is budget well throughout the year with Christmas in mind. People who do not do this often do turn to short-term loans in order to provide the greatest Christmas possible.
Setting a Christmas budget should be one of the first things you think about when wondering how you can save up for Christmas time. To do this, it may be wise to look at how much you had spent last year and aim to identify where you overspent and work out how you can cut back this time around. In other words, work out the things that you can go without this year and avoid purchasing them.
Credit Card
If you know that you simply cannot afford all you want to get within your budget without taking out some kind of credit, using a credit card is going to be far more effective than using a payday loan.
With a credit card, you can delay the payments and therefore not fall into immediate debt. With a payday loan, you have no way of delaying the payment and you will be required to pay it off on a certain day.
When you use a credit card, you can choose to pay the minimum amount or an amount you feel comfortable with until you can pay off the entire bill. You should still try and stick to the budget and not get carried away when using a credit card to pay for your Christmas.
A payday loan which you cannot pay off, however, is a horror story. You can fall in to some serious debt which can ultimately result in you having to take out more loans just to pay off the first one.
You should never spend out of your means, but if you do go over a credit card is a far better option.
Set up a Christmas Savings account
If you want to be prepared for the consumeristic Christmas, you should think about setting up a savings account which is specific to your Christmas spending.
If you do this in advance, you may be able to build up interest on the money you saving, as long as you do not touch the money until you need it.
It is super easy to set up a savings account, you can do it online, over the phone or you can go into your local branch and open it in person.
