Poorest families face 'debt-fuelled' Christmas

Parents will have to cut back on Christmas presents and fall into debt to make ends meet this winter, a charity warned today.

A survey by Save the Children revealed almost two-thirds (65%) of families with a household income of less than £30,000 believed they would struggle financially.

More than half (52%) planned to turn to high interest payment options such as store cards, catalogues and doorstep lenders to cover costs, while 56% said they would buy fewer gifts for their children.

Almost a fifth (19%) believed it would take more than a year to pay back the money, the survey showed.

According to the poll, 32% of families said their greatest worry was that they would struggle to pay it back.

Those living in poverty - earning less than £12,000 - painted a bleaker picture with almost 80% saying they would struggle to get by this winter and 55% planning to borrow money from high interest lenders.

The majority of those on the lowest incomes (63%) said they would buy fewer Christmas presents for their children this year.

The charity is calling for the Government to introduce new rules that would oblige high street banks to invest money in providing affordable loans to families who are excluded from mainstream credit.

Fergus Drake, Save the Children's UK director, said: "It is shocking that so many families have to borrow money to pay for day-to-day essentials such as heating and food.

"For some families even borrowing alone isn't enough, with many parents forced to cut back on Christmas presents as well as winter clothes.

"Even worse, many parents, especially those on a low income, have little choice but to borrow from high interest lenders pushing them further into debt and poverty.

"Families cannot continue to scrape by like this.

"The government cannot allow high interest lenders to plug the income gap of families who are struggling to get by.

"We want to see new rules obliging banks to do more to help the poorest families who are excluded from mainstream credit have a source of affordable borrowing.

"It's about time that the banks, whose industry has been saved by the taxpayer, put something back and it should be Britain's poorest children who benefit."

Meanwhile, another survey showed Britons will withdraw more than £200 from their savings to help cover the cost of Christmas.

The average person plans to withdraw £221 from a savings account to help pay for the festive season, with this sum representing 9% of the total amount they have set aside all year for a third of people, according to Abbey.

Six out of 10 people plan to cut back on costs this Christmas, with 42% saying they will reduce the amount they spend on presents for family and friends.

One in four people will try to spend less on food, drinks and Christmas parties, while 2% plan to return some of the presents they receive to shops in exchange for cash.

The survey also found that 39% of people do not set aside anything on a regular basis, while a fifth of people do not have any savings to fall back on.

:: Opinium Research questioned 2,000 people for Abbey in November. The Save the Children survey, carried out by YouGov, involved 1,006 parents with a net household income of less than £30,000 between November 9 and 11.