Families urged to budget for Christmas

FAMILIES were yesterday warned to steer clear of moneylenders and to budget properly for Christmas.

The Irish League of Credit Unions warned families that overspending prior to Christmas was ill-advised, particularly at a time when personal borrowing in Ireland is at record levels.

The ILCU’s chief executive, Liam O’Dwyer, said middle and low-income families were most at risk, and said those households should be particularly wary of moneylenders.

“Planned borrowing for longer term expenditure is worthwhile as long as borrowers have done their sums and can manage repayments as they fall due,” he said.

“Borrowing for things like home improvements need to be dealt with in the short term, but borrowing to spend on consumer items like the costs of Christmas is dangerous, especially if credit is created by using your credit card, or even worse, moneylenders.

“The current practice of consolidating short term loans into mortgages only results in paying back more.”

Mr O’Dwyer said research conducted by the Centre for Co-Operative Studies found that 39% of people at post offices on welfare payment days were using moneylenders, and 40% said they had used moneylenders in the past.

He said some people were forced to cover APR rates as high as 188.5%, which perpetuated a cycle of debt.

“This is the time of year when people are most susceptible to the easy money promises of money lenders who gloss over the frighteningly high costs involved.”

Quoting a Deloitte survey on Christmas spending, he said Irish households will spend an average of 1,431 on Christmas, almost 7% more than last year.

He said the high rates charged by legal — and illegal — moneylenders would only add to the bill for families.

He said those experiencing difficulties should

contact agencies such as the Money Advice and Budgeting Service or local credit unions, and follow the ILCU’s tips for Christmas shopping, which suggests setting budgets, preparing lists before shopping, paying cash where possible and avoiding the use of credit cards, reading the small print on deals and searching for ‘ “interest free”’ deals where possible.