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Bonuses offer debt boost

Despite Christmas normally heralding a flurry of consumer activity, many Britons are planning to clear their debts this festive season, research indicates.

Over a quarter of Britons plan to use their Christmas bonus to help pay off their debts, up from 18 per cent last year.

A spokesman from the One Account said: "This year, it certainly seems that what an increasing number of people want for Christmas is less debt."

With the average employee receiving a Christmas bonus of £1,550.95, this should go some way towards boosting their personal finances, but the One Account claims that it could be best put to use as a mortgage bonus.

Making a £1,500 overpayment could reduce the time it takes to pay off a mortgage by six years, the One Account calculates.

However, few Britons are planning to use their bonus as a mortgage overpayment.

A One Account spokesman said: "With the desire to be debt-free high on many people's Christmas lists, it's therefore surprising to find that only two per cent of consumers intend to use their bonus to reduce their mortgage, often people's biggest financial burden, when doing so could save them thousands of pounds."

Christmas bonuses are forecast to have other effects on the property market, especially in London and the south-east.

Bonuses for city workers are expected to reach £8.8 billion this year, with experts estimating that £4 billion will be spent on property.

To add you your Christmas bonus, click here to see how much you could borrow with Lombard Direct.

20/12/2006 10:11:16

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