A staggering 41 per cent of Australians would consider going into debt to fund their Christmas and summer holiday spending, according to a survey from Compare the Market (CTM).
What’s more, nearly half of those surveyed said they plan to pay for Christmas using credit cards, personal loans and Buy Now, Pay Later Services.
It comes as the average Australian is set to fork out $828.01 this year on presents, decorations, food and all the Christmas trimmings. Some states are expected to spend even more, with the average spend in Victoria and New South Wales skyrocketing compared to other areas.
Christmas on credit
The CTM research also revealed that while the majority of people surveyed (53.78 per cent) said they would make purchases using cash or money from their savings account, 32.31 per cent said they would use a credit card, 7.8 per cent would be using Buy Now, Pay Later services, while just 0.73 per cent said they would take out a personal loan to fund the festive season.
I reckon you should really think twice before putting Christmas on credit. It’s an expensive time of year, but the last thing we want to see is people racking up hundreds of dollars of debt and starting 2026 in the red.
It can feel so easy to buy all the presents using Buy Now, Pay Later or pop the Christmas feast on a credit card, but it doesn’t take long for those transactions to spiral into long-term debt if you’re not on top of what you’re signing up for. If you miss a payment or can’t get your head around interest on credit cards, your dream Christmas could quickly turn into a nightmare that you’re paying off for years to come.
For example, analysis by CTM found that financing a $828 Christmas credit card spend with a 20 per cent interest rate would take five years and 11 months to pay off, and cost you $1,417 in total, assuming you only made minimum repayments.
This is why you have to be so careful if you’re going down the credit card route this Christmas. In this example, a quick tap of your credit card could end up costing you $589 and take nearly six years to pay back.
That’s a big financial commitment for just one day.
Soften the blow
Instead, I’d be looking at other ways to claw back cash:
- Are you on the most competitive offer with your electricity retailer?
- Could you save more by switching to a cheaper insurance provider?
- How much extra can you pocket by switching from big brands to generic names at the supermarket?
I’ve seen first-hand how these little switches throughout the year can save families all over the country significantly, so that’s my challenge to Aussies before they reach for the credit card this Christmas.
Oh, and don’t fall into the psychological trap of Buy Now, Pay Later services. It can be so tempting to rely on Buy Now, Pay Later services for Christmas purchases, but it doesn’t take long for those payments to snowball – especially if you’re a sucker for a sale sign or go a little mad in the shops at this time of year.
Combine all those Buy Now, Pay Later costs with things like your summer energy bill, back-to-school costs and the everyday expenses we all face, and you could find yourself struggling to keep afloat in the New Year.
Here are some ideas for reining things in:
Top festive budgeting tips
Lock in your festive budget early and stick to it – Don’t let Christmas creep up on your wallet. Write down everything, including gifts, food and travel and set a realistic limit. If you can’t pay it off straight away, it’s likely too much. A clear plan now means no nasty surprises in January.
Rethink what makes a great gift – Big price tags don’t equal big smiles. Homemade treats, personalised experiences or even a thoughtful letter can mean more than the latest gadget. Creativity beats credit every time.
Beat the last-minute panic – Impulse buys are budget killers. Start shopping early to grab deals and avoid the pressure of Christmas Eve splurges. Planning ahead means more savings and less stress.
Compare and conquer – Before you splurge, look for savings elsewhere. Switching energy retailers, insurance providers or even assessing your home loan rate could free up hundreds for your festive budget. A few minutes comparing deals can make a big difference.
