Personal Loans

London, England, United Kingdom (AHN) – Britons had a heyday swiping their credits cards while doing their Christmas shopping. Reports estimate the total amount of credit card purchases for gifts, food and drinks at $2.85 billion (GBP 1.9 billion).

However, another $225 million (GBP 150 million) was expected to be spent on Boxing Day, bringing the total credit card bills due by early 2011 to $3.075 billion (GBP 2.05 billion).

Including cash and online purchases, analysts estimate post-Christmas and early 2011 spending will hit $33.75 billion (GBP 22.5 billion), which would register a 20 to 25 percent increase in sales. The rise in sales is also attributed to pent-up demand after a number of shoppers failed to go to the malls prior to Christmas because of the heavy snowfall and transport crisis.

Experts fear that the record yearend holiday spending could result in a record number of insolvencies to be filed, prompting a major consumer credit counseling group to appeal to consumers to use their credit cards wisely.

There is speculation the high volume and amount of purchases may have been done deliberately to beat the hike in value added tax to 20 percent from 17.5 percent by Jan. 4. A consumer website confirmed that one-third of shoppers admitted purchasing items ahead of schedule to beat the VAT increase. But because of the high interest rates on credit purchases, particularly for 12 percent of Briton consumers who pay only the minimum monthly, any savings from the VAT hike would be eaten up by interest charges.

Yearend holiday purchases would add to the worsening debt situation of Britons. According to Bank of England figures, consumers owe a total of $87 billion (GBP 58 billion) on credit cards and another $235.5 billion (GBP 157 billion) on unsecured loans and overdrafts. To compound their financial woes, 100,000 public servants are expected to be laid off in early 2011.

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