By Reno Charlton
News Editor
Christmas can be costly; however even if it’s knocked a few pounds off your bank balance letting it knock several points off your credit score as well is an extreme measure.
Unsurprisingly, it's been reported that many people have used credit to cover the cost of this year's festivities. However, more surprisingly is the reported number of people turning to insolvency to fix their financial worries.
Mike Gerrard, the head of an insolvency company has been quoted by the Independent saying that "...many individuals spend up on credit at Christmas and pay no heed to the financial warning bells. Come January, they find themselves in a situation where previous financial woes are compounded by the bills arriving from the festive season and in these situations insolvency becomes the only way out."
But is insolvency really the only answer? Financial guru Martin Lewes regularly stresses insolvency as a real last resort and is only a suitable option for people who find themselves in absolute debt crisis unable to meet even the minimum of their monthly repayments.
Insolvency should not be taken lightly, while it may seem to offer a helpful quick fix to money worries it can seriously impact on your financial future and leave future credit options looking pretty bleak at best.
Lyndsey Burton, director of financial price comparison services Credit Card Comparison Online and ChooseMoney.co.uk says "If you are facing money worries from built up credit card debts this January, take the time to consider your options first, monthly repayments on credit cards can be reduced even without taking out new credit - move higher rate balances to your cheapest credit accounts first, and then if your credit rating allows it take out a promotional balance transfer deal to cut down on interest charges even further."
"The priority focus should be first on reducing your interest charges and then focus on repaying the debt."
It is vital not to panic after taking stock of your Christmas spend and think twice before rushing into something as serious as insolvency.
There are far more suitable alternatives available to people who have simply overspent on their credit card - as many of us do at this time of year - and transferring the balance to a low rate for life or interest-free balance transfer credit card could be just the answer.
If you really are in debt crisis - and that means you are unable to reduce your monthly repayments and really cannot afford to meet the minimum required, even by tightening a few notches on your belt for the next few months, then you should get in contact with a free debt counselling service, such as the Consumer Credit Counselling Service, National Debtline or Citizens Advice Bureau. Any of these organisations, while they should be considered as a last resort to serious debt problems, will be able to provide you with free and unbiased help.
Further reading:
- How 0% balance transfer credit cards work
- How life of balance transfer credit cards work
- What to do if you're in debt
- How to improve your credit rating
 Credit card guide
Credit card news archive
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