This year, households across the UK are entering a festive season marked by significant financial pressures. Annual research carried out by Fair4All Finance, the not-for-profit financial inclusion organisation, has revealed that 10 million people saved less or stopped saving entirely this year.

This trend is particularly concerning when viewed against national trends, such as the ONS Households Savings Ratio survey which suggest that saving across the general population has increased since the pandemic. When viewed together, this shows that people in financially vulnerable circumstances have been left behind by this trend, instead needing to use existing savings pots as a form of income, rather than being able to add to them and build a buffer in case of emergencies.

The Christmas period brings its own unique financial burdens, and it can be easy for many, especially those without access to savings or affordable credit, to have their holiday eclipsed by money worries. Research from StepChange Debt Charity further reveals that 27% of people expect to struggle to afford Christmas this year, highlighting widespread concerns about festive spending.

However, Fair4All Finance, together with the community finance sector, believes that the festive season should be a time where everyone is able to come together with loved ones without the additional burden of stress over spiralling spending. It can be an expensive time of year, and it can be easy for those in financially vulnerable positions to feel like they have less control over their outgoings.

This is why the Association of British Credit Unions Limited (ABCUL), has drawn insights from a range of credit unions and community lenders such as Wave Community Bank and Just Credit Union, to compile a set of practical, low cost ways for households to manage Christmas spending this year and prepare early for next year.

Smart Christmas spending: Community-backed tips for a more affordable festive season

Spread the cost with small, affordable loans

For households that do need to borrow, small Christmas loans from community lenders can provide a safer alternative to high-cost credit. These loans often start from very low amounts, avoid hidden charges, and offer flexible repayment options that keep borrowing manageable.

Simplify finances with debt consolidation

Bringing multiple debts into a single affordable repayment can help take the pressure off in the new year when people begin paying off what they have spent during the Christmas period. Consolidation loans from community lenders can offer predictable payments and can reduce financial stress, supporting better budgeting across the winter months. However it is important to note that before entering this arrangement, individuals must seek the appropriate advice; this is not a one-size-fits all solution, and consolidation as a solution cannot fix debt problems on its own.

Start early with Christmas savings schemes

Many credit unions offer dedicated Christmas savings accounts that allow members to put aside small amounts throughout the year. Some schemes will even allow savers to add to their 2026 Christmas fund alongside repaying this year’s borrowing, helping to break the cycle of festive debt.

Cut costs with easy, community-inspired money-saving ideas

Community finance providers regularly share practical, real-life ways to reduce Christmas costs, including:

Organising a Secret Santa instead of buying individual gifts
Hosting a potluck meal to share food costs
Creating a Christmas shopping list early and sticking to it
Avoiding pressure-fuelled “new year, new you” impulse buys
These ideas help households protect both their budgets and their festive spirit.

Credit unions are seeing first-hand how difficult this Christmas is for many households. With millions cutting back on saving or feeling pressure to borrow, it’s vital that people know there are safe, affordable alternatives on their doorstep. Credit unions offer practical support - from small, sensible loans to Christmas savings schemes - that help families stay in control and avoid starting the new year in debt. We encourage anyone feeling the strain to speak to their local credit union early and explore the options available.

Kate Pender, CEO, Fair4All Finance, comments:
"The festive season should be a time for joy and connection, but for many households and financially vulnerable individuals, financial pressures can make this period stressful. This year, we welcomed the Government’s Financial Inclusion Strategy, which seeks to address the causes of financial exclusion.

"Amongst other things, next year we will be piloting a small sum loan product with mainstream banks, so more people can access affordable, responsible credit when they need it. We’ll also be continuing to support the credit union sector to achieve transformational growth through regional collaboration and technology investment, backed by a new £30m fund – investing in these forms of financial access at the source.

"We’re proud to be part of this solution. We want to see the number of people coping with financial vulnerability go down each year, and urge those in need of advice and support to look for the right solution for them with their local community finance provider."

Emma Norledge, Deputy CEO, Wave Community Bank, comments:
“Most people’s monthly budgets don’t allow for the extra costs of Christmas so we support our members to manage their money for the festive season throughout the year with our Christmas Savings account, where the savings are locked away to 1st November. Planning for Christmas spending is important and any savings put away in advance – no matter how small - help when it comes to working out your Christmas budget.

“We also help with savings hints and tips on our social media to help manage the costs without losing the fun. This year we’ve done a weekly countdown with savings ideas to help with planning and making a difference to Christmas spending from the beginning. This year, we have also attended Christmas markets across Kent and East Sussex to talk to people about the dangers of loan sharks and borrowing from them for Christmas. This awareness campaign, in what could be seen as unlikely venues, has been really effective in drawing attention to this issue and how credit unions are here to help at this time of year.”

There is a lot of pressure on people at Christmas and it’s very easy to get carried away end up with a big financial headache in January. By thinking about how much you can afford and setting a budget, this can be avoided. We are all about saving and we do encourage all our members to open a Christmas savings account and put a little away each week. If you’ve not done so for this Christmas, its never too early to start planning for next year.

Whilst we encourage people to save for Christmas, we recognise people often need to borrow. One of the biggest dangers is using unplanned borrowing. As Christmas gets closer it is easy to pay for presents and food on credit cards or overdraft, but it can soon become unmanageable and lead to financial problems in the New Year. It is especially tempting to use ‘Buy Now Pay Later’ offers, but these can quickly add up and unless you have a clear
plan to repay these loans within the interest free period it can again become a big headache.

If you are going to borrow it’s important to go to an ethical properly regulated lender like a credit union. They will ensure the loan is affordable and is paid of in plenty of time for next Christmas. They’ll also set you up with a savings account so that you are putting a little away for a treat an emergency or for next Christmas.