People 'should avoid a financial hangover'

People are being advised to save as well as spend this Christmas, Credit Action has recommended.

Lenders are expected to be stricter when it comes to providing loans and credit in the coming months, according to the online debt advice service.

Chris Tapp, director of Credit Action, has commented that the ongoing credit crunch may lead to a slowing down in the economy next year, which means that rates and charges are increasing and lending criteria is becoming tighter, so now may be the time to start saving money and budgeting for next year.

There has been a recent dip in personal loans being approved, with around half the people applying for loans being rejected, while charges are rising to such an extent that it is becoming more expensive to borrow, Mr Tapp added.

"We recognise that budgets are not exciting things for people to do, but people do need to spend a little bit of time working out what their income is, working out what their expenditure is and how they're going to make those two match up," he said.

"We'd love to see more people saving and really thinking through the cost of Christmas and making sure that it's not going to leave them with a financial hangover."

Research by Cornhill Direct has shown that one in ten people who borrow in the festive season are still in debt the following Christmas.