The true cost of Christmas

Easy credit, children with ever-higher expectations - all this and the general desire to splurge over the festive season can mean financial misery. Paul Slade sounds a warning

With Christ- mas less than three weeks away, many UK families are already running up debts that will haunt them through most of 1999.

An understandable wish to have a "good time", the determination to give children a Christmas they will remember, combined with easy access to credit, leaves many families in deep financial trouble.

Sue Holman, of Wandsworth Money Advice Centre, says: "Often, people haven't budgeted before they start their Christmas spending and find that they get into debt for that reason. When they have overspent, they tend to pay off their credit debts and leave out the most important debts, which are mortgages and rent. With credit debts, the worst that can happen is that they get a County Court Judgement, but with mortgage or rent they could lose their home."

The situation is made even worse by the fact that the highest heating and fuel bills of the year also come in just after Christmas, pushing an already shaky situation into crisis.

Trevor Newham, of IFA Network, a group of over 600 independent financial advisors, believes part of the problem is the unsolicited offers of credit which seem to come with every post. Mr Newham says: "Credit cards are the real issue, because they are so easy to take advantage of. It is all too easy to take up some of the offers that exist at the moment for credit of pounds 2,000 here or pounds 3,000 there. That is a genuine problem."

Midland Bank says four out of 10 people use their credit cards to fuel their Christmas spending, often paying interest of well over 20 per cent as a result. Over one million Midland cardholders alone fail to clear their bills each month, and so must pay interest on the debt.

Mr Newham says: "The interest rates are clarified in the sales material, but I'm not sure what the impact might be. At this time of year, people do tend to sleepwalk into debt."

To see just how expensive the modern Christmas is, you have only to look at the host of festive surveys produced by UK banks, insurers and credit card companies. These make it clear that by far the most expensive item to have in your house at this time of year is a child.

A survey by Goldfish, the credit card company, this week found that children under 12 get presents worth an average of pounds 128 from their parents alone. The Prudential discovered that what seven to 16-year-olds most want for Christmas is a pounds 599 computer, closely followed by a Playstation games console priced at pounds 119.95.

In 1996, the most popular Christmas toy was a Buzz Lightyear doll (price pounds 24.99), in 1997 it was a talking Teletubby (price pounds 41.99), and this year it looks like being a Furby (price pounds 34.99, if you can find one).

Ms Holman agrees it is hard to economise when faced with avaricious children. But she says: "We would advise people to avoid being pressurised by their children. Sit down with them and explain the situation."

Some areas of the country are more profligate than others, and the Goldfish survey concludes that Britain's meanest people live in the Midlands. There, each person spends an average of pounds 244.10 on presents, against pounds 310 in the north east of England and pounds 294.40 on the south coast. Men, it seems, are more generous than women, spending an average of pounds 28 against women's pounds 20 on each present they buy.

But overspending is not the only danger the festive season presents. The Royal Society for the Prevention of Accidents says that 80,000 people will spend part of their holiday in hospital, over 30,000 of these accidents come through falls, generally while navigating unfamiliar or toy-strewn stairs. Yorkshire Bank warns that the kitchen, too, is a death trap, as tipsy cooks fall victim to slippery floors or pans full of hot fat.

If insurers Guardian Direct are to be believed, you will most likely get back from the hospital to find your house has been burgled. Leave a big pile of presents under the tree in an empty house, they suggest, and you might as well jam the front door open. There are nearly three times as many burglaries in December as there are the following month.

Have a happy Christmas!