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Debt the halls: Avoiding a Christmas Blowout

Australians rack up billions in credit card debt in the run-up to Christmas each year, but savvy savers are set to buck that trend. In December 2018 alone, Australians borrowed nearly $30 billion – a bill of roughly $1863 per credit card, according to It’s a sizeable bill, and one that more than a quarter of shoppers will still be paying off, almost 12 months after the fact.

But the post-splurge “debt hangover” is avoidable, and according to Amanda Varidel – Heart Mortgage Services – many are already taking steps to lessen the damage.

“Many Australians have been getting savvier about trying to reduce their credit card debt, and are actively looking towards other forms of payment instead, such as debit cards and buy-now-pay-later.  Even though there will be a spike in credit card debt this Christmas, we may not see those huge levels of debt that Australians have racked up in the past. We may start to see those reducing in years to come” Amanda said.

“In fact, the use of buy-now-pay-later (BNPL) services has skyrocketed in the past year – particularly among younger users – and could replace credit cards as the preferred payment method within a few years. These services, such as Afterpay and Zip Money, allow shoppers to make a purchase instantly, but pay in instalments afterwards, and are often cheaper than a credit card because they don’t charge interest” Amanda added.

“While they can reduce costs, we though caution shoppers to be vigilant with their spending, as many find it easy to rack up hefty bills when using delayed payments.  These services are very popular and essentially free if you make repayments on time, but you do need to be careful about buying wisely and not spending more than you normally would.  If you use BNPL services responsibly, they can be a great way to spread the cost of what is a very expensive season for many Australians over a longer period of time” Amanda said.

“The trouble is that if you’re not very careful about budgeting when you’re using these kinds of services, it’s very easy to spend more than you normally would.”

Our Advice: Shop early, plan ahead

Regardless of how shoppers choose to pay for their gifts, the best way to keep Christmas affordable is for buyers to plan want they want to buy ahead of time, budget appropriately for it, and avoid leaving things to the last minute. Do your shopping as early as possible – you want to avoid that 24th of December shopping frenzy because if you’re panic purchasing on December 24th, you’re much more likely to pay more. We suggest asking retailers to price match with their competitors too, as competition between sellers is “pretty stiff” throughout the festive season and “there are absolutely discounts to be had” for those who shop smart.

Your Choice Mortgage Brokers Pty Ltd atf Halo Innovation Trust trading as Heart Mortgage Services - Australian Credit Licence 38643

The information contained herein is of a general nature only and does not constitute advice. You should not act on any information without considering your personal needs, circumstances and objectives. We recommend you obtain professional financial advice specific to your circumstances. The views expressed here are not ours. While the information contained in this article may contain or be based on information obtained from sources believed to be reliable, it may not have been independently verified. Where information contained in this publication contains material provided directly by third parties it is given in good faith and has been derived from sources believed to be accurate at its issue date.  To the maximum extent permitted by law: no guarantee, representation or warranty is given that any information or advice in this publication is complete, accurate, up to date or fit for any purpose; and no party or associated entities as mentioned is in any way liable to you (including for negligence) in respect of any reliance upon such information. This article may also contain links to websites operated by third parties who are not related to us. These links are provided for convenience only and do not represent any endorsement or approval by us.

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