An individual voluntary arrangement (IVA) is a five or six year commitment...
Use a credit card and buy now, pay until 2027
Doesn’t it seem as though Christmas comes round quicker every year? No sooner have you taken down the decorations than it feels like you’re dragging them back down from the loft again!
So the plans you made to put aside a little each month for the festivities has been swallowed up by those essentials that just keep cropping up.
Research from moneysupermarket.com reveals that over half of Brits (53%) are worried about funding Christmas this year, an increase on last year when 45% were worried.
Once again, you are depending on your ‘plastic friend’ and whipping out the credit card to fund the cost of Christmas.
But do you realise that if you spent £500 on using your credit card last Christmas and you only made minimum payments*, it could take you until 2027 to clear the balance? Or if you upped your payment by £10 a month that you’d only finish paying off the debts when the Olympics roll into London in mid-2012?
But of course by then you could be paying off the credit card bills for this Christmas and next Christmas as well, putting your repayment date back by years.
To put this in a wider context, Credit Action report that the Association of Business Recovery Professionals estimated that almost a third (31%) of personal insolvencies that occurred in March this year were triggered by overspending during the festive season (PDF, page 3).
So before you splash the cash make sure you can afford to clear it within a reasonable timescale by making much more than the minimum payments. Of course the best practice if you use a credit card is to pay back in full each month.
This minimum repayment calculator will help you to work out the true cost of Christmas on a credit card.
*Using the average credit card APR of 18.5%