Many people will now be starting their Christmas shopping, with a large number of people who will be using credit in order to fund their purchases. With this year having been quite difficult financially for so many people, there will be large numbers of people who do not have the ready funds to make their purchases and will be turning to their trusty credit cards, loans or even overdrafts in order to pay for the things that they need to buy.

However, there are also many people who cannot get traditional finance who may turn to payday loans to get money for spending over Christmas, particularly those with damaged credit. With payday loans the lack of credit checks and quick access makes them appealing to those that are unable to get traditional finance but the interest rates on these loans can be crippling, which is why consumers should avoid using them other than in emergencies.

Despite these rates, there will be many people who decide to take out a payday loan to fund Christmas and unless they can repay the loan in full when they are paid in January they could end up facing spiralling debt as the fees and charges add up. Some people will inevitably end up rolling the debt over because they cannot afford to repay it in January, which is where things can get really costly.

One official said: “Many people might thing that a payday loan is the easy solution to getting finance to make purchases for Christmas, partly due to the ease of getting this finance and the speed at which it can be obtained. However, for those who are unable to repay the debt in full when they get paid in January the interest can be crippling and it could lead to spiralling debt, which is not the ideal way to kick off the New Year.”

Tags: damaged credit, Business Finance, payday loans, credit card, quick access, traditional finance, purchases, new year