One in five still clearing Christmas 2011 debt

With many Brits nursing their financial hangovers from Christmas 2012, almost one in five is still paying off debt from Christmas 2011, research from comparison service uSwitch has found.

According to the data, 19 per cent of consumers are starting 2013 with an average credit card debt of £5,000 or more, with 17 per cent admitting they are yet to fully pay for Christmas 2011.

uSwitch claim that a 'debt hangover' is likely to last well into 2012 after six in ten Brits (59 per cent) paid for goods on credit cards this Christmas.

With pay rises likely to stall and living costs continuing to rise, 53 per cent of consumers are expecting to take a year or more to pay off their credit card debt. A further 15 per cent said it could take them as long as three years to settle their balance and seven per cent said they will not be able to clear it at all.

Despite financial pressures, just 29 per cent of Brits cut back on their Christmas spending this year, with half spending the same as last year, 23 per cent spending more than last year and 10 per cent spending over £1,000.

Michael Ossei, personal finance expert at uSwitch, said it was easy to get carried away with credit card spending over the Christmas period.

"Credit cards can be a practical and cost-effective way to shop - but only if you can clear your full balance at the end of the month," he advised.

"Most cards offer a 56-day interest free period but, once this is over, consumers could be slapped with a hefty fee. Store cards can be even more expensive, charging as much as a stomach-churning 30 per cent interest rate."

"Balance transfer cards can be a good choice for those struggling to clear their debt, offering borrowers the chance to pay off their balance at their own pace."

Mr. Ossei advised consumers to shop around and seek professional advice for the best deal.