With an unpredictable festive season upon us, new research has revealed that 2020 is shaping up to give Brits one final, unexpected gift this Christmas: debt.

The research from Tymit, the UK’s first instalment-only credit card, revealed that one in four celebrators (25%) are feeling the pressure to make this Christmas the best ever after a year dominated by the pandemic, with 21% set to spend extra to make this a reality. But with Covid-19 significantly depleting Britain’s savings – 30% have saved less this year and 18% haven’t saved at all – Tymit is urging caution on how the festivities are funded.

According to the research, a worrying two in five celebrators (41%) don’t set themselves a Christmas budget. For those that do, the vast majority are set to go over them (90%), despite only 24% realising ahead of time that they will. When analysing respondents’ pledged versus predicted spend, the research forecasts over £5.8bn of unexpected expenses for Brits this Covid Christmas, which could send them into the red. 

The last-minute nature and uncertainty around Christmas this year has added to budgeting dilemmas, with almost half (47%) of respondents putting off purchasing until Christmas restrictions were clarified by the government last week. And that’s not the only thing throwing budgets to the wind: three in ten have had to change their long held festive plans following the rule of three households announcement, with 17% having to step up unexpectedly to host.

First time hosts face additional costs

According to Tymit’s research, 15% of those that are hosting last minute this year will be doing so for the first time, amounting to a staggering 1.3m Brits. But, while the average spend of hosting is £427, first-timers will have to dig a little deeper into their pockets, as 70% of seasoned hosts admitted that their first time hosting Christmas was their most expensive ever. Buying too much food is the expense that catches out the most (31%) first time hosts, as well as choosing more expensive food and drink (22%), purchasing new tableware (17%) and additional decorations (17%).

So how are we funding this Merry Christmas?

Over a third (34%) of people are turning to credit as an alternative to fund festive spending, including credit cards (18%), overdrafts (7%), loans (5%) and Buy Now Pay Later services (6%). Worryingly, one in eight (14%) of those say they don’t know when they’ll be able to pay it off completely and 15% of those who used credit to fund Christmas last year are still paying this off. 

Martin Magnone, CEO and Co-founder of Tymit said: “Christmas excitement can cause many to forget about financial pressures or regular budgets. With uncertainty around government restrictions leaving many people planning Christmas at the last minute, it’s even easier to ignore. Not thinking carefully about your spending or having unexpected festive expenses could bring forth the Ghost of Christmas past: debt. Entering 2021 without a plan to pay that debt off is the last thing anyone needs after such a challenging year. My advice would be to get spending savvy and proactively manage your costs in order to avoid the red by the time next Christmas comes around. Tymit helps people to lower the compound interest they pay and choose the size of instalments they make, ensuring that if you do spend on a credit card this Christmas, you are clear about when it will be paid off.”

To keep spirits high this Christmas and help Brits manage their festive spending, Tymit has teamed up with Clare Seal, the Instagrammer behind My Frugal Year.

Clare Seal from My Frugal Year commented: “After the year we’ve had, there’s a lot of pressure to make Christmas extra special, and to overcompensate with gift-giving. But Brits need to be savvy with their budgeting, or risk facing a stressful new year at the expense of the festive period. There are numerous ways to have a magical Christmas on a budget, whether it’s making your own gifts or searching for the best deals, and for those that are hit with unexpected expenses, it’s good to get clued up about your credit options. Credit cards shouldn’t be a taboo subject and can be really useful when used correctly, it’s just important to go into any arrangement with your eyes open. As someone who has misused credit in the past, I like that using instalment-only credit options, such as Tymit, gives you full transparency about interest, what you owe and how long it’ll take you to pay it off. Being accountable for your payments and planning ahead are key to not getting stuck with revolving debt.”

To find out more about how Tymit can give you a helping hand this Christmas visit https://tymit.com/.