Charity urges families to be more 'credit clever' over Christmas » Communities » 24dash.com

Families from London who turn to credit to pay for Christmas could be setting themselves up for a New Year debt disaster, charity Action for Children has warned today.

The fears follow a survey from the charity and high street bank, Barclays, which found that 46% of people from the capital were at risk of borrowing more than they could afford because they don't know the meaning of APR - the cost a consumer pays for credit expressed as an annual percentage.

The figure is higher than for anywhere else in the country - including the East (26%) and the Midlands (31%). It is also 10 percentage points higher than the national statistic (36%).

The charity is now urging people to be more "credit clever" when planning their festive finances and has published guidance to make people think twice before they borrow.

Mother-of seven Diane Smith, 43, from Hillingdon, North West London, said she wished she'd paid more attention to her borrowing options before she took out a string of costly doorstep loans to buy £1,000 worth of Christmas presents for her children last year.

Diane has since been supported to take back control of her finances during Financial Futures money management workshops at her local Action for Children children's centre.

Diane said: "I was stupid with money. I'd borrow from the doorstep lenders because it was easy without paying any attention to what I'd be paying back. I had no idea what APR was and just wanted the cash quickly to get through Christmas."

The survey also found that a quarter of those planning to borrow across the country this Christmas would use catalogue credit, a fifth planned to use store cards and one in seven would use doorstep lenders - three of the four most expensive sources of credit.

This compares to just one in 11 who said they were planning to borrow from their local Credit Union and only one in 17 who were applying for a loan from the Department for Work and Pensions - two of the cheapest sources of extra cash.

More than a quarter of respondents expected to still be paying off what they borrow this year by the time next Christmas comes around.

Hugh Thornbery, Action for Children's strategic director of children's services, said: "This survey underlines what we already knew from our work with some of the most vulnerable families in the London area - that those most likely to be tempted to take out loans at Christmas are unfortunately the least likely to know what it's going to cost them.
It's vital that those on the lowest incomes have all the facts at their fingertips before committing to what otherwise could be a very costly decision."

Rachel Allan, Barclays Community Relations Manager for London and Southern, said: "It's clear from these poll results that there's a real need for this kind of work and that's why we've teamed up with Action for Children to give families and young people the kind of money management tips and guidance they need to stay out of debt."

Action for Children's tips can be viewed at www.actionforchildren.org.uk/creditclever.