Borrow money the right way this January
More than a quarter of Britons have just £100 to last them until end of January, according to research by a voucher website.
The survey by money-saving website VoucherCodesPro.co.uk also shows a further third have only between £100 and £200 to spend in January.
Polling more than 1,200 UK adults in full-time employment as part of research into consumer spending habits, the survey found 31% spent most of their pay packet on "gifts" while 24% said the majority of their monthly budget had gone on "socialising".
Three quarters of respondents said Christmas spending would affect their budget for January, with a third admitting regret for spending too much.
George Charles, spokesperson for the website, says: "It seems those people who loosened their belts over Christmas will soon be looking to tighten them again in order to get through January."
If festive over indulgence has gotten the better of your finances and you need to borrow some money to make ends meet make sure you do it in the right way.
Dip into your overdraft
If you have an interest-free overdraft, consider dipping into it to sure up your finances for the rest of the month. Of course, it will mean you will have to cut costs somewhere else along the way to get back in the black so it is not advisable to live below the breadline even if the overdraft is interest free.
Take out an interest-free credit card
Similarly, you can take out an 0% interest credit card to pay for anything which might break the January bank while times are tough then pay off the cost once the February paycheck comes around. Again, make sure not to let the debts snowball before you’ve had a chance to get them under control.
Avoid family and friends
Borrowing from family and friends might seem like a simple and easy way to help with cash-flow problems but the potential financial turmoil and emotional hurt means it’s not worth it - never a lender or a borrower be.
Be wary of short-term loans
Payday loans are all the rage these days but they could just make your problems worse. A quick cash fix could help you until the end of the month but steep interest rates on the loans make them a risky choice.
Short-term cash loans designed to be borrowed mid-way through the month to tide the borrower over until they next get paid, whereupon the loan is settled. Generally used by people with bad credit ratings and/or no access to short-term credit such as an overdraft or credit card. Like logbook loans, this type of borrowing is hugely expensive: the average APR on payday loans is well over 1,000% and in some instances can be considerably more.
An overdraft is an agreement with your bank that authorises you to withdraw more funds from your account than you have deposited in it. Many banks charge for this privilege either as a fixed fee or charge interest on the money overdrawn at a special high rate. Some banks charge a fee and interest. And other banks offer a free overdraft but impose very high charges for exceeding the agreed limit of your overdraft.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.