• Written by Tess Sanders Lazarus

According to David Lennon, founder of ‘You’re Welcome Finance, also known as the ‘Personal Loan Guy’, “personal spending peaks at Christmas time leaving many people with unmanageable credit card debt.  


“Christmas is supposed to be a great time of year when family gathers together and enjoys each other’s company but unfortunately for most people it has just become a spending frenzy.


“A lot of people overspend.  They get caught up in the hype and get carried away on presents, end of year festivities and holidays.   Come January, many people find themselves in a world of pain.”


The Australian Securities and Investments Commission reports that the average spend on Christmas gifts per person is over $600.   36 percent of people use their credit card to pay for presents and the average credit card debt after the festive season is $1666.


“82 percent of people take up to six months to pay off their credit card debt,” David said.


“A further 11 percent of people take up to 24 months to pay off their credit card debt.   This means that every month, not only are people making payments, they are continuing to generate interest.  A whopping seven percent of people take longer than two years with some never paying it off.   Many people will miss payments and continue to accrue interest, which is growing debt.


“All of this amounts to damage to a person’s credit score.  A reduced credit score means you won’t be able to source finance such as a loan of any type and if you do, you will be paying higher interest because of it.  


“A damaged credit score not only means you won’t be able to get a loan, it also means you won’t be able to do basic things like buy a new phone on a post payment plan.”


Credit scores are based on a number system between 0 and 1200.   Everyone has a credit score.  You can find out what your score is by contacting your local broker or Equifax, formerly VedaScore.   Equifax Inc. is a consumer credit reporting agency which collects and aggregates information on over 800 million individual consumers and more than 88 million businesses worldwide.   


“Ideally, your credit score should be in the 800 – 1200 range.   The average credit score for most Australians is in the 600 – 700s.   If you fall below 500 you are stuffed,” David added.


“With so many people finding themselves up to their necks in credit card debt after Christmas, my advice is to plan now and get a personal loan – avoid the trap of putting things on the card.


“With a personal loan you are borrowing a set amount of money, paying a set amount of interest and paying it off over a set term.   This is easier and better all round.  


“By doing this, you are avoiding the risk of overspending, reducing unplanned and unmanageable debt and keeping your credit score intact.


“A good broker is across all the lending products available in the market and will find the best loan for you and your circumstances.  Generally, personal loans can be arranged within hours and funds delivered within days.   My advice to everyone is to get a personal loan rather than accumulate credit card debt and avoid risking your financial future just because of Christmas.”


You’re Welcome Finance is a national finance company which provides personal loans, car loans and home loans.


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