Credit Cards at Christmas - Cut Them Up or Keep Them Close?

29th November 2025

The November 2025 Budget left many families feeling squeezed. Frozen tax thresholds, rising duties, and stealth levies mean disposable income is under pressure.

As Christmas approaches, the temptation to lean on credit cards grows. But should households go as far as cutting them up?.

The Case for Cutting Up
Avoiding debt traps: With interest rates still high, carrying balances into the new year can quickly snowball.

Psychological discipline: Physically removing the card reduces impulse spending, especially during the festive season.

Budget clarity: Families forced to spend only what's in their account often make more deliberate choices.

The Case for Keeping Them
Emergency cushion: Credit cards can provide short‑term cover for unexpected costs — a broken boiler or urgent travel.

Consumer protection: Purchases over £100 often carry legal protections under Section 75, useful for big‑ticket items.

Cash‑flow management: For households with stable income, using cards carefully and paying off in full can smooth timing without incurring interest.

The Balanced Approach
Rather than a dramatic gesture, households might consider:

Limit use to essentials or protected purchases.

Set a strict repayment plan — clear balances in January to avoid interest.

Lower limits or freeze cards digitally — many banks now allow temporary blocks without cutting the card physically.

Use debit for discretionary spending — gifts, outings, extras — to keep spending grounded in available funds.

Cutting up credit cards before Christmas is a powerful symbolic act, but not always practical. For many families, the smarter move is to control, not eliminate: keep cards for emergencies and protections, but avoid using them to paper over the cracks left by stealth taxes and rising costs. In the shadow of the Budget, discipline matters more than drama.

Don't let the Chancellor's squeeze push you into the lender's arms. Whether you cut up the card or keep it, the key is to avoid carrying debt into 2026.

Christmas is coming But the Bills Arrive in January
If you overspend on credit cards at Christmas 2025 and don't clear the balance, interest charges in 2026 could snowball rapidly. With UK average credit card APRs now around 24-26% (and some cards closer to 35%), even modest debts can rack up hundreds of pounds in interest over the year.

How Interest Builds
Average APRs:

Standard cards: 24.3%

Rewards/other cards: 26.5%

Some higher‑risk cards: up to 35.9%

Household debt levels: The average UK household credit card debt in late 2025 was £2,572.

Example: £1,000 Overspend at Christmas 2025
If only minimum payments are made:

At ~25% APR, interest alone could exceed £250 over 12 months.

The debt could take years to clear, with total repayment far above the original spend.

If balance is carried at 35% APR:

Interest charges could reach £350+ in 2026, turning a £1,000 splurge into a £1,350 bill.

Example: £2,500 Balance (close to household average)
At 25% APR, interest in 2026 could add £625 or more if not repaid.

At 35% APR, charges could exceed £875, pushing the balance toward £3,400 by year‑end.

Risks for Families
Compounding effect: Interest accrues monthly, so balances grow faster than many expect.

Stealth squeeze: With frozen tax thresholds and rising duties from the Budget, households may find it harder to clear balances, making interest charges even more punishing.

Psychological trap: Minimum payments feel manageable, but they barely dent the principal, leaving families stuck in long‑term debt.

Practical Steps
Pay more than the minimum — even small extra payments cut years off repayment.

Use balance transfer offers — shifting debt to 0% cards can save hundreds if managed carefully.

Ring‑fence energy bill savings (from Budget relief) to reduce debt rather than increase spending.

Plan Christmas 2026 early — set aside savings monthly to avoid repeating the cycle.

Overspending at Christmas 2025 could cost families hundreds in interest charges through 2026 if balances aren’t cleared. With APRs at 24-35%, the Budget squeeze makes discipline more vital than ever.