We all love Christmas but financially, the December festivities can really take their toll. Some of us are fortunate enough to have saved money throughout the year – either not burdened with unexpected expenses or just really good at managing money – but the rest of us might be less well equipped when it comes to Christmas shopping.

From Christmas presents, to food, to jumpers, there are so many things we have to consider for the big day. Even if you like a lowkey Christmas, a small turkey can cost a fortune (we recommend buying a frozen one in November!).

If the weeks counting down to Christmas get you in a financial fuzz, it can be easy to take out credit to help with the costs of the festive season. But borrowing money isn’t always the best way to solve a financial shortfall.

What is a payday loan?

A payday loan is a potential short term solution to occasional cashflow issues. You can borrow a small amount of cash which gets transferred to your bank account within two hours, and then you repay the loan and interest on your next payday.

Another type of short term loan is an instalment loan. Instead of repaying the loan on one date, the repayment is split over multiple repayment dates – usually 3 to 6. This can make the repayments more manageable as each one is smaller than the one lump sum repayment with payday loans, however the total amount payable is usually more as you borrow over a longer period.

What should I use payday loans for?

Payday loans are intended to be used to bridge the gap between paydays when emergency expenses arise that simply cannot wait. For example, if your car windscreen cracks and you need to replace it in order to drive safely to work. It can be tricky to mange your finances, especially if you have a bad credit history, so sometimes a payday loan can be the access to quick cash that you need to keep your finances flowing.

As you will accrue interest on your payday loan, you shouldn’t really use them for things like leisure purchases as you’ll end up paying much more than if you waited until your next payday or saved up a little bit of cash beforehand.

Can I use a payday loan to cover my Christmas expenses?

As we said, payday loans should really be used to cover emergency expenses, and Christmas isn’t really an emergency. Although it’s great to splash out and enjoy the festive season, it’s not an excuse to spend outside of your means as it could land you in financial difficulty with repayments.

Ultimately, it’s up to you how you choose to spend your money: you know your financial circumstances and what you can and can’t afford. As long as you have taken into account your current financial commitments and any upcoming responsibilities, you should have a pretty strong idea of your disposable income over the next few weeks and months. If you need a little cash to manage your cashflow, it’s not irresponsible to borrow when you know you can afford the repayments. However, if your borrowing is an attempt to tackle more long-term financial difficulty then you might need to contact a free debt advisor for help.