Key Points
- Australians estimated they would spend an average of $800 this Christmas.
- Thirty-one per cent of Australians said they would rely on credit cards for their Christmas spending.
- Research from the Salvation Army found 17.4 per cent of Australians will go into debt this festive period.
Whether it’s a bottle of wine, festive decorations, or thoughtful gifts, Christmas is often accompanied by a shopping frenzy — a tradition that experts warn could trigger a post-Christmas debt “time bomb”.
Australians estimated they would spend an average of $783 this Christmas, while one in three planned to spend more than $1,000, according to research from the Australian Securities and Investments Commission (ASIC).
Some spent this money using credit cards or , something that may lead to post-Christmas debt for many Australians.
‘That extra gift’
“People like to spend money to have a good Christmas with their family … So they’ll spend money on credit cards or other forms of short-term debt like revolving loans or BNPL that end up costing them money in the new year,” Andrew Grant, associate professor of finance at the University of Sydney, explained.
“This is a fairly predictable pattern that we see in consumer financial year, and you might spend a little bit more than you had planned.
“Whether it’s just buying that extra gift to their relative or you’ve got to spend a bit more on that ham or that bottle of wine that you might not usually buy.”
ASIC’s research in late November found 75 per cent of Australians planned to fund their Christmas spending at least partially through their savings, 31 per cent said they would rely on credit cards, and 16 per cent said they would use BNPL services.
The report showed millennials and baby boomers were most likely to use their savings to fund their spending, while gen Z and millennials were most likely use credit cards.
“I think it’s important to understand that things like credit cards and buy now, pay later debts are sort of fairly commonplace,” Grant said.
“But there are consequences to not paying them off, including you struggling to get loans down the track.”
‘Sort of a time bomb’
According to a recent analysis by the research agency and financial comparison site Canstar, credit card interest charges have risen every January since 2015.
Canstar’s report predicted: “this daily amount could climb even higher in January if shoppers can’t pay back their silly season spending, which includes Christmas shopping, the Black Friday and Boxing Day sales and the summer holidays”.
The analysis showed Australians are expected to put an estimated $86 billion on credit cards between November and January.
Amid the cost-of-living crisis, there are concerns the post-Christmas debt issue will intensify.
“It’s just important to understand that the cost of living pressure has put stress on a lot of people’s budgets already,” Grant said.
“To buy what you might ordinarily buy for Christmas is affected by the cost of living spending, and at the same time, there might be less of your family budget to go around to fund that.”
New data from Roy Morgan and the Australian Retailers Association (ARA) showed that this year, shoppers were expected to spend $11.8 billion on presents — $1.6 billion more than in 2023.
Shumi Akhtar, an associate professor at the University of Sydney Business School, warned the combination of post-Christmas debts can create a “sort of a time bomb”.
“It’s because we just don’t have enough to even go through the very basic necessities, which is food and the utilities and, of course, the medical bills,” she said.
“Because of this [post-]Christmas debt, it will be a very tough situation for certain people, especially if they didn’t know what they were getting into.”
How not to get into debt?
Recent research from the Salvation Army predicted 17.4 per cent of Australians will go into debt this festive period.
However, Akhtar said people can still take some measures to face fewer consequences.
“Frankly, they should have been alerted about [the debt] before they actually used the credit card,” she said.
“But even if they didn’t, then they should basically act on it straight away, now is the right time.
“If they’re already struggling with paying the minimum payment on their credit card, they have to plan how they are going to pay it off because it’s going to climb out very fast.”
