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Credit card applications set to rise with Christmas less than 100 days to go

Experian offers tips to avoid overspending at Christmas Mortgage applications on the up in August Demand for credit cards are typically set to grow with less than 100 days to go until Christmas.

Last year, credit card applications increased by 7.2% in October and 8.6% in November month on month1.

The growth in credit applications may reflect consumers wanting to take advantage of Cashback or Rewards credit cards for their Christmas spending. Payments for large purchases between £100 to £30,000 using a credit card are also protected by Section 75 of the Consumer Credit Act.

With just under 100 days – and 3 months’ salary – until Christmas, people are encouraged to take time today to consider the true cost of Christmas for them, make a plan and start budgeting.

Amir Goshtai, Managing Director of Experian Marketplace, comments:

“Planning ahead for the Christmas period can make a big difference and relieve the pressure for many families across the country. With many end-of-summer sales still running, being organised can give you a head start and leave you to focus on taking some time out with family and friends, making memories and cherishing the moment.

“We continue to see a rise in people choosing experiences over material goods in general, and at this time of year a shared experience could be more special and financially easier than expensive goods. Either way, planning early and budgeting carefully will make your money go further.

“If your budget really won’t stretch and you need to put some of your spending on a credit card, then make sure you are only spending what you can afford to pay back. Checking your eligibility means you can assess your chances of being approved for a credit product before applying and get the deal that’s right for you. This gives you the peace of mind of knowing your credit score won’t be impacted before applying. “

Looking at the most recent barometer data, mortgage applications were up by 9.8% in August 2019 year on year2. With the BoE announcing last week the base rate will be held at 0.75%, it appears people are taking advantage of relatively low mortgage deals despite the general economic uncertainty.

Interest in fixed rate mortgage types also remains high. 88.3% of those searching for a mortgage via Experian in August looked for a fixed monthly repayment deal, a rise of 8.7% from January 2019. 7.1% of searches were for a variable repayment type and 4.7% for a tracker3.

Experian’s tips for managing extra spending at Christmas

  • Make a list. This should not only include any gifts, but also travel over Christmas, food and any work parties/nights out. Then, set a budget beside each one to get an idea of the additional spend. If you can, save a small amount of your salary from now to cover costs. Remember, December may be a short pay month and January a long one so you will need to ensure all bills and regular payments are covered when working out your monthly expenses.
  • Keep an eye out for deals and offers. With more people opting for experiences such as holidays instead of physical goods according to recent Experian research, many shops have sales and offers almost all year round. There are also big events such as Black Friday (29th November) and Cyber Monday (2nd December) where many deals are to be had.
  • If you need to borrow money for additional spending over the festive season, look at your finances with a view from post-Christmas, to see how much you can realistically afford to pay back monthly. To help you get the best rates, it really is worth reviewing your score before you apply and using comparison sites to find the best deals for you. Experian shows your eligibility of being approved for credit cards and loans and with certain lenders, what your interest rate will be if your application is successful instead of a representative rate that might increase when you apply.