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Avoid more debts this Christmas Avoid more debts this Christmas
(1 day later)
Money Talk By Mark Lyonette Chief Executive of the Association of British Credit Unions You do not have to be a miser like Scrooge to get through ChristmasMoney Talk By Mark Lyonette Chief Executive of the Association of British Credit Unions You do not have to be a miser like Scrooge to get through Christmas
Christmas should be an exciting time of year.Christmas should be an exciting time of year.
But many people can dread it as they worry about the money they are spending. But many people dread it as they worry about the money they are spending.
Year in, year out, thousands of people give in to the pressures of spending and run up huge amounts of debt throughout the festive season.Year in, year out, thousands of people give in to the pressures of spending and run up huge amounts of debt throughout the festive season.
So what can we do to avoid getting into debt over Christmas?So what can we do to avoid getting into debt over Christmas?
My advice is to plan, prepare and budget - and here are a few tips to help manage your money ahead of what can be one of the most expensive times of the year.My advice is to plan, prepare and budget - and here are a few tips to help manage your money ahead of what can be one of the most expensive times of the year.
BudgetingBudgeting
Work out your budget - decide what you can afford and stick to it.Work out your budget - decide what you can afford and stick to it.
Although Christmas will soon be upon us, it is not too late to start savingAlthough Christmas will soon be upon us, it is not too late to start saving
Do not feel daunted by the idea of budgeting and do not feel pressured into spending more than you can afford to.Do not feel daunted by the idea of budgeting and do not feel pressured into spending more than you can afford to.
Your local credit union is a good place start when looking for somewhere to help you start taking control of your money. Your local credit union is a good place to start when looking for somewhere to help you start taking control of your money.
Credit unions are financial co-operatives, owned and controlled by their members - people like you. Credit unions are financial co-operatives owned and controlled by their members - people like you.
They provide savings, loans and a range of affordable financial services.They provide savings, loans and a range of affordable financial services.
There are nearly 500 credit unions based in towns, cities and workplaces across Britain so the chances are, even if you have not heard of one before, there will be one near to you.There are nearly 500 credit unions based in towns, cities and workplaces across Britain so the chances are, even if you have not heard of one before, there will be one near to you.
Credit unions are regulated by the Financial Services Authority (FSA) and are members of the Financial Services Compensation Scheme (FSCS), so your money is 100% safe.Credit unions are regulated by the Financial Services Authority (FSA) and are members of the Financial Services Compensation Scheme (FSCS), so your money is 100% safe.
As ethical organisations, credit unions look to find the best ways of helping members avoid getting into debt or taking out unnecessary loans, and they will take time to explain their products and give you the information you need.As ethical organisations, credit unions look to find the best ways of helping members avoid getting into debt or taking out unnecessary loans, and they will take time to explain their products and give you the information you need.
Saving for ChristmasSaving for Christmas
Credit unions offer a wide variety of ways to save, and most credit unions allow you to save in a separate account so you know that the money you set aside can be used for Christmas.Credit unions offer a wide variety of ways to save, and most credit unions allow you to save in a separate account so you know that the money you set aside can be used for Christmas.
Mark LyonetteMark Lyonette
By making regular deposits into a Christmas savings account, members can relax knowing they have not had to run up huge credit card bills or taken out an expensive personal loan to pay for Christmas.By making regular deposits into a Christmas savings account, members can relax knowing they have not had to run up huge credit card bills or taken out an expensive personal loan to pay for Christmas.
And members can spend the cash they have saved anywhere they want as they are not tied to using vouchers which are valid in only certain stores. And members can spend the cash they have saved anywhere they want as they are not tied to using vouchers which are valid only in certain stores.
Many credit unions allow you to pay into a Christmas account straight from your wages or benefits - it is the easiest way to save as the money goes into the account before you see it.Many credit unions allow you to pay into a Christmas account straight from your wages or benefits - it is the easiest way to save as the money goes into the account before you see it.
Or you can pay in to your account through local branches or collection points, or by direct debit from your bank account. Or you can pay into your account through local branches or collection points, or by direct debit from your bank account.
Credit unions do not have outside shareholders to pay.Credit unions do not have outside shareholders to pay.
The only people who benefit from the profits a credit union makes are the members who use their services, so you may get a dividend on the money you have saved as well.The only people who benefit from the profits a credit union makes are the members who use their services, so you may get a dividend on the money you have saved as well.
Although Christmas will soon be upon us, it is not too late to start saving.Although Christmas will soon be upon us, it is not too late to start saving.
Try and get into the habit of saving a little each week or month; it is amazing how it can build up.Try and get into the habit of saving a little each week or month; it is amazing how it can build up.
How to borrow moneyHow to borrow money
If you do need to borrow for Christmas, credit unions offer great value loans too.If you do need to borrow for Christmas, credit unions offer great value loans too.
You do not have to pay for debt adviceYou do not have to pay for debt advice
Many credit union loans will cost you no more than 1% a month on the reducing balance of the loan (an APR of 12.7%).Many credit union loans will cost you no more than 1% a month on the reducing balance of the loan (an APR of 12.7%).
What this means for example is that if you borrowed £1,000 over one year, you would repay no more than £1,067 in total.What this means for example is that if you borrowed £1,000 over one year, you would repay no more than £1,067 in total.
Many credit unions charge less, some may charge more, but by law this cannot be more than 2% a month on the reducing balance (an APR of 26.8%).Many credit unions charge less, some may charge more, but by law this cannot be more than 2% a month on the reducing balance (an APR of 26.8%).
And credit union loans come with no hidden charges and no penalties for repaying the loan early.And credit union loans come with no hidden charges and no penalties for repaying the loan early.
Get free adviceGet free advice
There are a number of agencies which provide free advice to people struggling with debt repayments, and these should be your first point of call.There are a number of agencies which provide free advice to people struggling with debt repayments, and these should be your first point of call.
There is also a large number of commercial organisations which claim to be able to help people reduce debt repayments and secure extra credit.There is also a large number of commercial organisations which claim to be able to help people reduce debt repayments and secure extra credit.
In practice what they may provide is a larger loan over a longer period of time. In practice, what they may provide is a larger loan over a longer period of time.
While this may provide a short term relief, it is likely not to be the best solution in the long term. While this may provide short term relief, it is likely not to be the best solution in the long term.
You do not have to pay for debt advice so make sure you use a free agency such as a local Citizens Advice Bureaux, the Consumer Credit Counselling Service or the National Debtline. You do not have to pay for debt advice, so make sure you use a free agency such as a local Citizens Advice Bureau, the Consumer Credit Counselling Service or the National Debtline.
Many credit unions have links with local debt advice agencies and will be able to put you in touch with someone local you can talk to.Many credit unions have links with local debt advice agencies and will be able to put you in touch with someone local you can talk to.
The opinions expressed are those of the author and are not held by the BBC unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.The opinions expressed are those of the author and are not held by the BBC unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Always obtain independent, professional advice for your own particular situation.