Close to 2 million Australians are nursing a Christmas debt hangover that will take months to repay after spending billions over the festive season.
A recent survey by consumer comparison site Finder found Australians owed $2.7 billion in holiday spending, with the average shopper $1634 in debt.
Finder said based on the survey of 1010 respondents that 8 per cent of Australians (about 1.7 million people) expected to go into debt during the holiday season and one in five of those shoppers would need at least six months to pay the debt off.
Australians are nursing a $2.7 billion Christmas debt hangover. Credit: Dominic Lorrimer
In 2024, the Australian Retailers Association said $69.8 billion was forecast to be spent by shoppers in the lead-up to Christmas, with the average shopper spending $707 on gifts. Bargain-hunting shoppers spent a further $1.3 billion at shopping centres and stores on Boxing Day, spurring a $3.7 billion spending spree – a 2.7 per cent increase from last year – in the six days after Christmas.
Financial counsellor Deb Shroot said Financial Counselling Australia generally saw an increase in demand for counselling post-Christmas, which then remained high throughout the first quarter of the year.
“It’s an expensive time of year for many people, with gifts, celebrations and holidays,” she said. “On top of that, people are often hit with extra debts and bills like the start of school costs in the new year.”
Shroot said financial counsellors saw people “getting into trouble” with buy now, pay later services at all times of the year.
“We often see clients who have at least five buy now, pay later products,” she said. “It’s very easy to get into a debt spiral, where the repayments quickly become unaffordable when the person is relying on debt to pay debt.”
Afterpay – a buy now, pay later lender– introduced a new spending cap feature before the holiday period last year to help customers set their own maximum spending amount.
An Afterpay spokesperson said customers continually turned to its service to manage their spending, noting 98 per cent of purchases made in the last quarter of 2023 did not incur late fees while 95 per cent of instalments were paid on time.
“In fact, if customers repaying on a six-week cycle made their purchases on Black Friday, they’d have it completely paid off by this Friday,” the spokesperson said. “That is often not the case with credit card purchases, which can accrue interest over a longer period of time.”
Australians spent an estimated $69.8 billion in the lead-up to Christmas and another $1.3 billion on Boxing Day sales.Credit: Joe Armao
A December report from the Australian Securities and Investments Commission’s Moneysmart found 16 per cent of respondents relied on buy now, pay later services to fund their Christmas spending, while 31 per cent relied on credit cards.
Research from Canstar found credit card debt attracting interest charges had risen every January since 2015, as Australians struggled to clear their debt within the interest-free period.
Shroot said it was important for people struggling with debt to remember they were not alone.
“You can contact the buy now, pay later company to see if you can negotiate a hardship arrangement, such as a reduced payment plan or a pause on payments,” she said. “You could also reach out to a free and confidential financial counsellor.
“The sooner the better, but it’s never too late. There are always options available, no matter what your debt situation is.”
The National Debt Helpline can be contacted on 1800 007 007.
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