One million will use payday loans to cover Christmas

(flickr (pasa47))

More than a million people will use payday loans to cover the cost of Christmas, according to the latest worrying figures from the Money Advice Service, which found 18m of us are concerned about how to afford this year's festivities and 17m expect to begin 2014 in debt.

With seasonal spending expected to reach £24bn despite many households planning to cut back compared with last year, this equates to £487 per person.

Funded by a typical payday loan available at an interest rate of 2,300 per cent a year, this equates to interest charges of more than £215 a week. Even paying off the debt by the end of January 2014 could bring the total repayment bill to around £933. Elsewhere a third of the UK population, around 16m adults, will pay for gifts, food, drink, transport and other seasonal treats with credit cards.

Christmas debt will add to existing average household debt of £6,020 according to the advice service. Including secured borrowing for a mortgage, the average amount owed per adult is £28,630, around 116 per cent of average earnings. Based on August 2013 trends - the latest available figures - the UK's total interest repayments on personal debt over a 12-month period would have been £59.8bn.

This is equivalent to £164m per day and means that UK households already have to find an average of £2,267 in annual interest repayments in addition to the expected seasonal bill.