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According to credit card provider Egg, late holiday shoppers are set to exceed their budgets by an average of 39%, or £150 per person. Egg research shows that a frantic rush for gifts will send around 4 millions Britons to the shops in the last week before Christmas. More than 800,000 of these will leave their spending to Christmas Eve.  In total, holiday shoppers are expected to overspend their budgets by a collective £594 million.

Poor planning is the major culprit, says Alison Wright, Chief Marketing Officer at Egg. “Each year we get 12 months advance warning that Christmas is coming, but still often resort to last minute panic buying. Consumers need to try to find ways to drive down the overall cost of Christmas - one way seems to be by avoiding those last minute shopping sprees, when lack of choice and panic buying are rife.”

Egg research also found that, despite popular belief, there is no difference between men and women when it comes to last minute panic buying. Women are just as bad as men about failing to plan ahead for the holidays.

The ongoing situation in the credit card sector is convincing consumers to withhold their plastic in favour of funding their holiday purchases with cash instead. 

According to figures released yesterday by cash machine network operator LINK, daily ATM withdrawals for the first ten days of December are up by 7.1% over the last month - previous years’ figures have been closer to 5%. 

This trend goes against predictions made last month by payments association APACS. The company predicted an increase of £53 billion or 4% in total festive retail spending over last year’s figures, which it claimed would be driven by increased card spending, accompanied by a 5% fall in cash spending - dropping from £19.8 billion in 2006 to £18.9 billion in 2007.   

The drop in credit card spending appears to be confirmed by overall retail spending figures released yesterday. Credit card giant MasterCard says shops recorded weak sales for November, causing a decline in the annual retail sales growth rate from 4.5% to 4%.

Christmas credit card debt continues to be a problem for heavy spenders. 

According to new research, one in five Britons will still be paying for their Christmas spending in June. 

One in ten will be paying off their debts in September, and a further 3.9 percent will be celebrating Christmas next year with a hole still in their pocketbooks from 12 months ago. 

Figures released last week by MoneyExpert.com supported the stats, showing 4.4 million people are still paying off credit card bills from last Christmas.

“It never ceases to amaze me how Christmas continues to sneak up on people and how ill-prepared financially they are to deal with it,” said Cesarina Holm-Kander, presenter of Channel 4’s Your Money or Your Wife and speaker at this year’s Your Money Matters Show.

“To those who are spending without thinking about the bigger picture this Christmas, I would like to offer a little reminder - a credit card binge is not just for Christmas, it’s a legacy that could be with you for most of next year, too.”

Despite the increasingly high cost of gifts expected over the holidays, only 50% of Brits put aside any savings in preparation for Christmas. 

The biggest savers are in the north-east, but perversely these are the same people who are most likely to get into debt this holiday period.

Unsurprisingly, London is home to the most aggressive festive spenders in the country, with one in five shoppers dishing out more than £1000 in holiday bills.  Contrast with East Anglia, where frugal spenders average half that - spending £500.

Overall, £53 billion is expected to hit retail counters over the Christmas period - £11.7 billion of that on plastic.

Travelling abroad this Christmas could cost you more than you think. Many credit card companies charge an extra 2.75% in commission for purchases made overseas – a fact most shoppers are unaware of, according the Post Office.

The Post Office is warning consumers to be aware of “hidden” fees. With holiday travel a favourite pastime for thousands of Britons, many people could be hit hard over the Christmas period. The first they will learn of it is when they see their credit card bills in the near year – too late to do anything about it.

Consumers can avoid unnecessary stress by doing all their holiday shopping at home. This advice is strongly voiced by Post Office Lending Director Gary Fitton: “For many people, going abroad for Christmas is a great way to relax and not have to worry about cooking Christmas dinner. However, many people could be returning from their Christmas break with a lot more than just ‘memories and mementos’ due to hidden card charges.

“Regardless of where people are travelling this Christmas, we are urging holidaymakers to ensure the only baggage they return with is the luggage they are carrying and not unnecessary card charges.”

The top three destinations this year are Spain, the US and France, making up 17%, 8% and 6% respectively of the total travelling trend. According to the Post Office, 49% of these festive voyagers will be pulling out their credit cards while on vacation.

Potentially thousands of credit applications may be rejected by banks during the holiday season.

According to accountants PricewaterhouseCoopers (PwC), repayments are becoming a problem for an increasing number of consumers, leading to profit slumps for many credit card providers. Also contributing to the slump is a rise in competition in the sector. The firm’s Precious Plastics 2008 report claims that £4 billion has already been lost by credit companies as a result.

The figures provided by PwC represent just a small part of the problem. The UK continues to experience worrying debt trends, with the average British adult owing £33,000 in unsecured loans – twice what it was in 2000.

Richard Thompson of PwC warms that the situation is not likely to improve any time soon. “Banks are continuing to take action in response to the rise in consumer debt by tightening their credit acceptance policies. Many consumers will find it increasingly difficult to obtain credit in the run-up to Christmas.”

Credit limits are feeling the pinch as the global financial crisis continues to make demands on banks and lenders.  The Daily Telegraph newspaper reports that borrowing limits are being cut by credit providers, even for those customers who have previously shown good repayment habits.

Credit company Goldfish admits to having cut limits for a “small” number of customers. 

The current crisis was triggered by the collapse of the sub-prime mortgage sector in the US, which saw many homeowners defaulting on their repayments. It was soon revealed that major financial institutions had purchased the debts and would be facing large losses as a result of the market collapse.

Banks responded globally by raising the rates at which they were willing to lend to each other. By now, the situation has filtered down to street level, where the average person is feeling the effects.

Prospects do not look promising for the future and further credit upheaval is expected in stock markets around the world. Expert opinions concur that the consequences of the current crisis will continue for some time. 

At home, London’s FTSE index felt its biggest drop since August following predictions by investment bank Goldman Sachs that rival corporation Citigroup would be facing big losses as a result of the US sub-prime mortgage collapse. Citigroup had been highly exposed to the US sub-prime market – the company saw its shares fall 6% yesterday as a result of the prediction.

The holiday season will see a financial drought when it comes to credit card usage, a new report predicts.  Both providers and retails should expect a downturn in plastic spending. 

A poll of nearly 2,000 adults by debt consultancy firm Thomas Charles revealed that around 25% of consumers plan to avoid spending on their credit cards entirely this Christmas. 

Another 10% said they intend to refrain from making large purchases on their cards for the next six months. 

A separate result indicated that 15% of those surveyed hold an unsecured debt from cards and loans of more than £10,000. The findings partially explain the reluctance of consumers to put even more strain on budgets that are already feeling the pinch. 

James Falla, Managing Direct of Thomas Charles, comments on the situation: “Interest rate rises and subsequent mortgage hikes mean that people have been relying on credit for their everyday expenditure - credit they can often ill afford. 

“But these results show that Britons are finally making positive steps towards confronting the amount of debt they are carrying - this is good news for the man on the street, but may signify bad news for retailers who have come to rely upon the vast amounts of credit spent at Christmas time.” 

An estimated £1.5 trillion of debt is held in total by Britons.

Price comparison company uSwitch welcomed a ruling made yesterday by the House of Lords directing credit card providers to allow refunds to consumers who buy goods and services abroad. Consequently, credit card purchases between £100 and £30,000 made overseas will still be insured by the providers under Section 75 of the Consumer Credit Act 1974. 

With £16.4 billion spent abroad last year on credit and debit transactions, the ruling is “great news for UK consumers”, states Mike Naylor, Personal Finance Expert at uSwitch. 

“This landmark decision has finally laid to rest the issue over credit card protection for overseas transactions which has been rumbling on with credit card suppliers for several years.” 

“The decision to uphold it means that wherever in the world consumers use their credit card, they can enjoy the same protection as they do in the UK. This is especially important with the growth of internet shopping where goods are often shipped to the UK from sites based overseas.” 

Lloyds TSB and Tesco Personal Finance lodged an appeal the Consumer Credit Act, but the appeal has since been dismissed.