Only Santa Should be in the Red this Christmas

19 May 2012

Christmas lights are being switched on around most of Northumberland over the next week and a half - signalling the real arrival of the festive season.

Every year it feels like Christmas is getting earlier, as advertisers and retailers start pushing their seasonal offers from late October onwards.

It feels like an inescapable rising tide for most of us, but many may struggle to keep their heads above water as the pressure to spend grows too much and they take on unmanageable debts to make ends meet in the short term.

Red may be a favourite Christmas colour, but Northumbrians really must try to keep in the black this year.

Two of the biggest problems our debt advice experts have encountered this year have been the rise of pay day loans, and the perennial problem of rogue money lenders.

These lenders are both linked with astronomical Annual Percentage Rates (APRs) - pay day loans have attracted headlines for their APRs that sometimes reach 3,000 per cent. Although they don't intend to lend to borrowers for anywhere near a full year, it is the cycle and habit that is dangerous.

If a borrower takes on, then pays back, a short-term loan at the end of one month, they'll almost certainly need it at the end of the next month, too. Each time, they will have incurred costs and, in all likelihood, will be slipping further into debt.

As for rogue money lenders, the message is always the same - steer well clear. What they do is illegal and recent figures have shown that annually around 15,000 people borrow money from loan sharks, a large proportion of those do so in the run up to Christmas.

When borrowers can no longer afford the steep repayments, lenders often turn to tactics of intimidation and violence, potentially turning what is meant to be a season of festive cheer into one of misery and apprehension.

I would encourage people to work out what they can safely afford to spend this Christmas, and stick to this budget rather than looking to borrow money from unscrupulous sources. No gift is worth risking the threats of a loan shark for, and those that do often find they are trapped in an impossible cycle of increasing repayments they are unable to afford.

At DAWN we offer support to people who are suffering from debt and our finance professionals can offer advice on the best way to prepare and budget for the festive season. At this time of year especially, we want to reassure people suffering financially that they are not alone.

The Ashington Christmas lights are to be switched on on Friday 26 November and in Morpeth on Saturday 27 November - let's use these celebrations to remember how it can be a magical time of year regardless of how much money is spent.

Northumberland residents can contact DAWN Advice for free support and advice on a range of financial issues through the new Northumberland advice line on 0844 4111 309.