As the festive season wraps up and the decorations come down, many Australians are left with more than just fond memories of Christmas cheer. The financial aftermath of the holiday season is hitting households hard, with new research indicating that the burden of Christmas debt is set to balloon to a staggering $2.7 billion.
The eye-watering cost of Christmas can be a significant stressor, and it seems that this stress is not short-lived. Households are tipped to be weighed down by Christmas debt for at least the next six months, with some facing even longer repayment periods.
According to comparison site Finder, eight per cent of Australians – that’s equivalent to 1.7 million people – are expected to see their credit card debt grow in 2025. On average, an individual owes $1,634, which, when multiplied across the nation, amounts to a national credit card debt of $2.7 billion.
The breakdown of these figures is concerning. Of those in debt from Christmas spending, the equivalent of 688,000 people surveyed say they will take five months to pay off what they owe. Another 304,000 people will need between six to 11 months to pay back the debt. Most worryingly, about 15 per cent will still be paying off their holiday debt by next Christmas, a cycle that can be hard to break.
Only 23 per cent of those surveyed say they will have paid back their Christmas spending in less than a month. This quick turnaround is not the norm, and it’s important to recognise that for many, the financial repercussions of the holiday season are long-lasting.
The research also highlights generational differences in spending habits. Gen X is reported to have planned to overindulge the most, with 11 per cent going into Christmas debt compared with just 6 per cent of baby boomers. This could be due to a variety of factors, including different attitudes towards credit and varying financial responsibilities.
Finder’s personal finance expert, Sarah Megginson, warns that overspending will haunt Aussies long after the Christmas lights dim. ‘Millions of Australians have hit 2025 already burdened with debt,’ she said. ‘During December, many Australians rack up substantial credit card bills and buy now, pay later balances, setting themselves up for a significant financial strain in the months to come.’
The cost of this debt is not just the amount spent but also the interest accrued. Finder warns that a credit card debt of $1,643 on an average purchase rate of 20 per cent could easily cost hundreds of dollars in interest alone over the course of a year. However, Ms. Megginson suggests there are strategies to manage the problem, such as interest-free balance transfer credit cards, which can offer a lifeline for those who splurged at Christmas.
Meanwhile, Canstar research shows an estimated $86 billion will be spent on credit cards across November, December, and January. With such a huge spending surge, many borrowers may struggle to pay back the debt within the interest-free payment period, leading to a large amount of interest owed to the banks.
Canstar’s data insights director, Sally Tindall, points out that ‘Australia’s total credit card debt on personal cards has risen every January for the last nine years, as households struggle to pay off their Christmas spending before their interest-free days end.’
If you find your credit card is already bursting at the seams, it’s crucial to take action before the situation unravels further. After a challenging year, it’s tempting to indulge over the summer, but starting 2025 with a financial hangover that could last for months, or even years, is the last thing anyone wants.
Let’s ensure that after the holidays, we’re left with joyful memories rather than financial stress. How do you plan and manage your holiday spending? Do you have any tips or strategies for a debt-free Christmas? Share your insights in the comments – your advice could inspire and support others for the next festive season!
Also read: Why Australians need to be mindful of post-Christmas financial strain
