Get tough with your Christmas budget

As Christmas gets closer and closer, and shops begin to feel the extra surge of present hunters, credit advice groups are warning people not to get carried away with the festive mood.If your looking to buy some presents, our Shop and Comparesearch can compare prices on different brands!

Following the Farepak collapse, when thousands of people on low incomes were landed with the prospect of going into debt in order to have a merry Christmas, advice companies have been even more alert to raising warnings for consumers.

According to Chris Tapp, the associate director of money education charity Credit Action, consumers are in danger of letting their debts snowball out of control this winter.

"We do see an awful lot of people who get to the same place next year and are still paying off debts from the Christmas before," said Mr Tapp.

"At this stage in the year one in eight people are still paying off their debts from the Christmas before."

He said that the acceptability of mounting credit could be a contributing factor: "It's because they have overspent the previous Christmas and then haven't managed to sort it out in the year.

"There is danger of it potentially snowballing because Christmas comes around and there is pressure to buy again and they put it back on their credit cards. Then when it comes to January – you are in an even deeper mess than you were 12 months ago."

The plight of some of those affected by the Farepak collapse was marginally eased yesterday with the announcement that 12,000 hampers would be sent out as a goodwill gesture, purchased by donors from the company's depot.

However, that leaves 4,000 savers without the festive goods they had been looking forward to.

Hope has arisen again for those who paid for their goods with a credit card, although the UK payments service APACS has today confirmed that only those paying by VISA would have hopes of protection, as MasterCard does not categorise the purchase in the same way.

Mr Tapp advised that the best way to manage a small purse around Christmas is to draw up budget for yourself and then make sure you stick to it.

"The trick there is to make a written budget – to write down where [you] are in January and how much [you] need to be paying to clear the debt by the middle of the year. If you have these sort of targets – you can see how much money you have got left."