Families may be forced to borrow in order to cover the cost of Christmas this year, as the price of the holiday is expected to rise 14% from 2023.

MoneyDoctors.ie’s John Lowe told Moncrieff that limiting presents can be the easiest way to cut down on costs.

“If you haven’t got it, you can’t give it,” he said.

“That’s why I really suggest at Christmas, talk about Kris Kindle, where you’ve got a number of family members and you have one present each, limit the present to maybe €20 or €30 and you get one present only.

“You don’t have to even give monetary presents – go and say to your father and mother, ‘I’ll cut the grass for you six times during the summer for free – that's your Christmas present’.”

Santa looks at his Christmas list to see who's been naughty or nice. (Credit Image: © PhotoXpress/ZUMA Press) Dec 10, 2008

Mr Lowe said that this may lead to awkward let-downs among family members, but it's better than leaving yourself with Christmas debt.

“The credit card [overdraft] is a nightmare,” he said.

“Say that you spend €2,400 over the Christmas period and come January you get the bill – there's no way that somebody can afford to pay €2,400 in one month from their salary.

“So, what they do is they pay the minimum, and they keep paying the minimum - that’s the real problem, because it’s going to take that person years to pay off that balance if they just pay the minimum every year.”

Balance transfers

However, for those already in these sticky situations, Mr Lowe recommended balance transfers to help them resolve their debts.

“An Post Money for instance has the best deal where you send it over to them for 12 months, 0% interest, and you pay it off over 12 months,” he said.

“So, that’s €200 a month - end of the 12 months you've got a clear credit card and it’s cost you absolutely nothing.”

Moneylenders

Mr Lowe also warned that while they might seem appealing, moneylenders should be avoided at all costs.

“There’s 35 authorised, regulated moneylenders in the Central Bank – you can check it up on their listings – and they are authorised to charge up to 200%,” he said.

“It’s absolutely scandalous – and unfortunately again, it’s the poorer people who are availing of those types of loans.

“Now, they’re not as bad as the unauthorised moneylenders, because they can charge up to 2,000%, not 200.

“So, those kind of people you want to avoid like the plague, to be honest.”

Mr Lowe said that services like Klarna, which offer users ‘buy now, pay later schemes’ should be used very sparingly.

Featured image: Young man calculating holiday expenses. Image: lakshmiprasad S / Alamy. 3 November 2020