Australians spent around $11.8 billion over this Christmas period – up $1.6 billion on last year.
With not much cheer in the air this month following record levels of spending, Trevor Greenhill from Cloud Payment Group investigates the issue of increasing Christmas debt.
The cost-of-living crisis combined with rent and mortgage stress left many Australians with little option but to rely on credit cards and Buy Now Pay Later options this Christmas.
A survey found that 38% of Australians – the equivalent of nearly 8 million people – accumulated significant debt during Christmas, with more than 600,000 saying it would take them nearly 12 months to pay off. These concerning figures combined with a “throwing caution to the wind” attitude by young Aussies, has Trevor Greenhill from Cloud Payment Group anticipating a busy start to the year for collections businesses around Australia.
Post Christmas has always been the busiest time of year for debt collection. When you add in the element of people wanting to “reward” themselves after an incredibly tough year, I’m concerned that we’re going to see these numbers grow even higher.”
ASIC’s Moneysmart released new findings last month that revealed whilst 74% of Australians set a budget for Christmas, only 29% actually stick to it. More concerningly, 65% planned to spend the either the same amount or even more as last Christmas.
New Roy Morgan data released in December 2024, revealed that Aussies were forecast to spend a staggering $11.8 billion on gifts, an increase of $1.6 billion on 2023 Christmas spending. They aren’t relying on savings to fund this shopping spree either, with heavy reliance on credit cards, Buy Now Pay Later schemes and even personal loans.
ASIC’s research also revealed that whilst three in ten Australians (28%) said they regretted their Christmas spending, nearly half (45%) said they did not regret how much they spent.
Trevor explains, “There are always issues with increased credit spend over the Black Friday and Christmas period. We see it every year. After a tough 2024, retailers went all out with extended Black Friday sales, Cyber Monday and earlier than usual Christmas sales in an effort to recoup annual profits. It adds so much stress to the family budget that other bills and necessities are put on the backburner in an effort to pay off the holiday season spend.”
Every year we hear the same reason for non-payments – that Christmas is the main culprit for financial distress for many Australian families. Without doubt we will be seeing increased debt coming through.”
Is there a solution for people with excessive Christmas debt?
The simple solution is to cut back on spending – and whilst many people are doing just this, unfortunately the dollar just doesn’t stretch as far as it used to. Over the 12 months to the September 2024 quarter, CPI rose 2.8 percent, with the largest price increases seen to impact the food, non-alcoholic beverages and recreation sectors. It’s just more expensive to live.
With the festive period just ended, many people would only now be coming down from the high of Christmas and facing the hard reality of festive excess.
Comments Trevor, “Financial literacy is one of the most important tools that can help people to properly manage debt at Christmas. People need to make sure they understand how to budget effectively and have a good relationship with money. Buy now pay later schemes are here to stay, but I urge consumers to use them as intended and remember to keep within their personal budgets.”