Debt Alert

Getting into debt is all too easy; getting out of it is another matter.

Christmas is one of those times when getting into debt is all too easy. We want to make sure the kids have a good Christmas but then January comes along and money to meet essentials is hard to come by.

At any time of year we would encourage you to;

The first thing to do is work out what you can realistically afford to spend. Write down what you have coming in each month and how much you are spending, so you can work out a budget to spend on Christmas. Be realistic when writing down your expenditure. If you need guidance see the budget sheet in our self help pack.

It's worth working out before you go shopping what you can afford to spend on each person and stick to that limit. If you need to take out credit, shop around. You need to compare the APR (Annual Percentage Rate) charged on different credit agreements and look for the lowest APR.

Before you sign the credit agreement, make sure that you can afford the monthly repayments. You may like to take your budget with you to remind you what you can afford to spend.

Interest-free credit can be very attractive. But remember if you don't pay the whole debt back at the end of the interest-free period, you will be charged interest.

If you decide to pay for Christmas on an overdraft from your current account, it's a good idea to arrange an overdraft limit with your bank first so that you pay a lower rate of interest. Remember that if you spend more than your overdraft limit the bank will charge you interest at a much higher rate and hefty bank charges too.

Doorstep credit and catalogues can be convenient and the repayments can be affordable. But the APR charged on these debts could be high; APR's on doorstep credit can be as much as 400%. Compare that with even a credit card, which is deemed high at 15%-20%.

If you've borrowed too much, don't panic. The most important thing to do is seek help. The CAB can help you work out affordable repayments and negotiate with your creditors.